Annual Report • Apr 30, 2013
Annual Report
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AB Pieno Žvaigždės
Financial statements for the year 31 December 2012
AB Pieno Žvaigždės Financial statements for the year ended 31 December 2012
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| Company details | 1 |
|---|---|
| Management's statement on the financial statements | 2 |
| Independent auditor's report to the shareholders of AB Pieno Žvaigždės | 3 |
| Statement of comprehensive income for the year ended 31 December | 5 |
| Statement of financial position at 31 December | 6 |
| Statement of changes in equity | 7 |
| Statement of cash flows | 8 |
| Notes to the financial statements | 9 |
| Statement of the Management | 43 |
| Annual report for the year 2012 | 44 |
| Telephone: | +370 5 246 1414 |
|---|---|
| Telefax: | +370 5 246 1415 |
| Company code: | 124665536 |
| Registered at: | Perkūnkiemio g. 3, Vilnius, Lithuania |
Paul Bergqvist, Chairman Voldemaras Klovas Julius Kvaraciejus Aleksandr Smagin Gžegož Ragoža Audrius Statulevičius Hans Mideus
Aleksandr Smagin, General Director
KPMG Baltics, UAB
AB SEB Bankas Swedbank, AB AB DnB NORD Bankas
| Thousand Litas | Note | 2012 | 2011 |
|---|---|---|---|
| Revenue | 1 | 769 089 | 700 924 |
| Cost of sales | (622 964) | (568 679) | |
| Gross profit | 146 125 | 132 245 | |
| Other operating income | 2 | 1 601 | 1 688 |
| Other operating expenses | 2 | (918) | (911) |
| Sales and administrative expenses | 3 | (107 567) | (98 849) |
| Operating profit | 39 241 | 34 173 | |
| Finance income | 4 | 345 | 368 |
| Finance expenses | 5 | (5 418) | (4 545) |
| Finance expenses, net | (5 073) | (4 177) | |
| Profit before tax | 34 168 | 29 996 | |
| Income tax expense | 6 | (5 102) | (4 311) |
| Profit for the year | 29 066 | 25 685 | |
| Other comprehensive income | 1 984 | - | |
| Total comprehensive income | 31 050 | 25 685 | |
| Basic earnings per share (Litas) | 7 | 0,57 | 0,51 |
| Diluted earnings per share (Litas) | 7 | 0,57 | 0,51 |
| Thousand Litas | Note | 2012 | 2011 |
|---|---|---|---|
| Assets | |||
| Property, plant and equipment | 8 | 197 273 | 181 166 |
| Intangible assets | 9 | 714 | 899 |
| Investments available for sale | 10 | 276 | 276 |
| Long-term receivables | 12 | - | 126 |
| Total non-current assets | 198 263 | 182 467 | |
| Inventories | 11 | 55 142 | 75 725 |
| Receivables | 12 | 79 788 | 73 238 |
| Cash and cash equivalents | 13 | 4 528 | 1 973 |
| Total current assets | 139 458 | 150 936 | |
| Total assets | 337 721 | 333 403 | |
| Equity | |||
| Share capital | 49 634 | 54 205 | |
| Share premium | 27 246 | 27 246 | |
| Treasury shares | - | (14 435) | |
| Reserves | 33 559 | 36 819 | |
| Retained earnings | 38 060 | 43 997 | |
| Total equity | 14 | 148 499 | 147 832 |
| Liabilities | |||
| Government grants | 15 | 3 187 | 4 422 |
| Interest-bearing loans and borrowings | 16 | 60 543 | 92 078 |
| Deferred tax | 17 | 1 862 | 1 478 |
| Total non-current liabilities | 65 592 | 97 978 | |
| Derivatives | 19 | 1 530 | 147 |
| Interest-bearing loans and borrowings | 16 | 60 975 | 28 578 |
| Income tax payable | 956 | 1 402 | |
| Trade and other amounts payable | 18 | 60 169 | 57 466 |
| Total current liabilities | 123 630 | 87 593 | |
| Total liabilities | 189 222 | 185 571 | |
| Total equity and liabilities | 337 721 | 333 403 |
| Thousand Litas | Note | Share capital |
Share premium |
Treasury shares |
Legal reserve |
Revalua tion reserve |
Other reserves |
Retained earnings (losses) |
Total equity |
|---|---|---|---|---|---|---|---|---|---|
| As at 1 January 2011 | 54 205 | 27 246 | (14 349) | 5 420 | 15 093 | 16 370 | 43 058 | 147 043 | |
| Comprehensive income for the period Net profit for the year |
25 685 | 25 685 | |||||||
| Other comprehensive income Depreciation on revaluation |
|||||||||
| increase of buildings | (1 114) | 1 114 | - | ||||||
| Total comprehensive income for the period |
(1 114) | 26 799 | 25 685 | ||||||
| Transactions with owners | |||||||||
| recognized in equity Transfer to reserves |
1 050 | (1 050) | - | ||||||
| Dividends | (24 810) | (24 810) | |||||||
| Acquisition of treasury shares | (86) | (86) | |||||||
| Total transactions with owners |
(86) | 1 050 | (25 860) | (24 896) | |||||
| At 31 December 2011 | 14 | 54 205 | 27 246 | (14 435) | 5 420 | 13 979 | 17 420 | 43 997 | 147 832 |
| As at 1 January 2012 | 54 205 | 27 246 | (14 435) | 5 420 | 13 979 | 17 420 | 43 997 | 147 832 | |
| Comprehensive income for | |||||||||
| the period | |||||||||
| Net profit for the year | 29 066 | 29 066 | |||||||
| Other comprehensive | |||||||||
| income Depreciation on revaluation |
|||||||||
| increase of buildings | (864) | 864 | - | ||||||
| Revaluation of property | 1 984 | 1 984 | |||||||
| Total comprehensive | |||||||||
| income for the period | - | - | - | - | 1 120 | - | 29 930 | 31 050 | |
| Transactions with owners | |||||||||
| recognized in equity | |||||||||
| Transfer to reserves | 11 250 | (11 250) | - | ||||||
| Dividends | (24 817) | (24 817) | |||||||
| Acquisition of treasury shares | (5 766) | (5 766) | |||||||
| Decrease of share capital | (4 571) | 20 201 | (15 630) | - | |||||
| Other income | 200 | 200 | |||||||
| Total transactions with | |||||||||
| owners | (4 571) | - | 14 435 | - | - | (4 380) | (35 867) | (30 383) | |
| At 31 December 2012 | 14 | 49 634 | 27 246 | - | 5 420 | 15 099 | 13 040 | 38 060 | 148 499 |
| Thousand Litas Note 2012 2011 Cash flows from operating activities Profit (loss) for the year 29 066 25 685 Adjustments for: Depreciation and amortization 8, 9 32 081 33 413 Amortization of government grants 15 (1 235) (1 069) Gain/Loss on disposal and write-off of property, plant (323) 341 and equipment Impairment loss of receivables 3 54 243 Change in vacation reserve 18 459 412 Write-down of inventories to net realizable value - - Interest income/expenses, net 4,5 5 220 4 012 Income tax expense 6 5 102 4 311 70 424 67 348 Change in inventories 20 583 (15 403) (7 478) (5 687) Change in receivables (672) (1 586) Change in payables 82 857 44 672 Cash flows from operating activities Interest paid (3 838) (4 012) Income tax paid (4 514) (2 644) 74 505 38 016 Net cash flow from operating activities Cash flows from investing activities Acquisition of property, plant and equipment 8 (42 925) (23 213) Acquisition of intangible assets 9 (82) (66) Proceeds on sale of property, plant and equipment 426 600 Other proceeds 200 - Net cash flow used in investing activities (42 381) (22 679) Cash flows from financing activities Loans received 35 848 110 680 Repayment of borrowings (34 986) (83 148) Acquisition of treasury shares (5 766) (86) Dividends paid (24 665) (24 947) Payment of finance lease liabilities - (20 077) Government grants received 15 - 632 Net cash flow from financing activities (29 569) (16 946) Change in cash and cash equivalents 2 555 (1 609) Cash and cash equivalents at 1 January 1 973 3 582 |
For the year ended 31 December | ||
|---|---|---|---|
| Cash and cash equivalents at 31 December | 4 528 | 1 973 |
The head office of AB Pieno Žvaigždės ("the Company") is located in Vilnius, Lithuania. AB Pieno Žvaigždės was established in 1998 by way of a merger of stock companies Mažeikių Pieninė, Pasvalio Sūrinė and Kauno Pienas.
As at 31 December 2003 the Company owned 64.2% shares of the subsidiary AB Panevėžio Pienas. During the year 2004 the Company acquired the remaining shares of AB Panevėžio Pienas. As of 30 November 2004 AB Panevėžio Pienas was merged to AB Pieno Žvaigždės and acquired the status of a branch.
The main office of the Company is located in Vilnius and the branches are in Mažeikiai, Pasvalys, Kaunas and Panevėžys.
All ordinary shares of the Company are quoted in the Vilnius Stock Exchange. There is no controlling entity or individual.
The Company is engaged in production and sales of dairy products to retail stores directly and through distributors.
The average number of employees in 2012 was 1,988 (2011 : 1,937 employees).
The financial statements of AB Pieno Žvaigždės have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union.
The Board of the Company approved these financial statements for issue to the shareholders on 28 February 2013. The shareholders have the power to reject the financial statements prepared by the management and the right to request that new financial statements be issued.
The financial statements are presented in Litas being the functional currency of the Company, and are prepared on the historical cost basis, except for land and buildings which are stated at revalued amount.
The preparation of financial statements in conformity with IFRS, as adopted by the EU, requires management to make estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.
Judgments and estimates made by management in the application of IFRSs adopted in the EU that have significant effect on the financial statements are discussed on page 23.
Embedded derivatives are separated from the host contract and accounted for separately if the economic characteristics and risks of the host contract and the embedded derivative are not closely related, a separate instrument with the same terms as the embedded derivative would meet the definition of the derivative, and the combined instrument is not measured at fair value though profit and loss.
Derivatives are recognized initially at fair value: attributable transaction costs are recognized in the statement of comprehensive income when incurred. Subsequently to initial recognition, derivatives are measured at fair value, and changes therein are accounted in profit and loss.
Transactions in foreign currencies are translated to Litas at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated to Litas at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are recognized in profit or loss. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated to Litas at foreign exchange rates ruling at the dates the fair value was determined.
Property, plant and equipment (except for land and buildings) are stated at cost less accumulated depreciation and impairment losses. Land and buildings are stated at a revalued amount less accumulated depreciation and impairment losses.
The cost of an item of property, plant and equipment comprises its purchase price, including import duties and non-refundable purchase taxes, after deducting trade discounts and rebates, any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
Borrowing costs that are directly attributable to the acquisition, construction or production of an item of property, plant and equipment where substantial period of time is necessary to get ready the asset for its intended use, are capitalized as part of cost of the asset.
The revaluation reserve is reduced annually in proportion to the depreciation of the revaluation increase, by a transfer from revaluation reserve to retained earnings as the asset is depreciated with the balance being transferred upon ultimate disposal.
Cost of self-constructed property, plant and equipment includes costs related to materials and direct labor costs as well as related indirect costs.
Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and equipment and are depreciated over their expected useful lifetime.
Useful lives, residual amounts and depreciation methods are reviewed at each reporting date.
Leases in terms of which the Company assumes substantially all the risks and rewards of ownership are classified as finance leases. Assets used by way of finance lease are recognized as assets of the company and are stated at the lower of their fair value in the beginning of the lease and the present value of the minimum lease payments at inception of the lease, less accumulated depreciation and impairment losses.
Costs incurred when replacing a component part of an item of property, plant and equipment are capitalized only upon write-off of the carrying amount of the component and if it is probable that the future economic benefits embodied with the item will flow to the Company and the cost of the component part can be measured reliably. All other costs are recognized in profit or loss as an expense as incurred.
Depreciation (except for land which is not depreciated) is charged to profit or loss on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. The estimated useful lives are as follows:
| • | buildings | 20 - 40 years |
|---|---|---|
| • | machinery and equipment | 10 - 12 years |
| • | vehicles other property, plant and equipment | 4 - 20 years |
Intangible assets acquired by the Company with a definite useful life are stated at cost less accumulated amortization and impairment losses.
Costs related to internally generated goodwill and trademarks are recognized in profit or loss as costs when incurred.
Subsequent expenditure on intangible assets is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is expensed as incurred.
Amortization is charged to profit or loss on a straight-line basis over the estimated useful lives of intangible assets. Intangible assets are amortized from the date they are available for use. The estimated useful lives are 1 to 3 years.
Goodwill is represented by the fair value of consideration transferred including the recognized amount of any non controlling interest in the acquiree, less the net recognized amount (usually fair value) of identifiable net assets acquired and liabilities assumed, all measured at acquisition date. Goodwill is included in intangible assets and annually assessed for impairment.
Goodwill relates to the acquired and subsequently merged company AB Panevėžio Pienas.
Financial assets are classified as either financial assets at fair value through profit or loss, held-to-maturity financial assets, loans and receivables, or available-for-sale financial assets, as appropriate. All purchases and sales of financial assets are recognized on the trade date. When financial assets are recognized initially, they are measured at fair value, plus, in the case of financial instruments not at fair value through profit or loss, directly attributable transaction costs.
Investments in equity securities are classified as available-for-sale and at initial recognition are stated at fair value plus the related direct costs. Subsequently the investments are revalued to fair value carrying the gain or loss on their revaluation through other comprehensive income to equity. Impairment losses, if any, are included in profit or loss if the fair value decline is considered to be prolonged or significant. When the investments are sold, the accrued gain or loss previously recognized under equity, is recognized in the statement of comprehensive income. If the fair value cannot be determined reliably, the investments in equity securities are stated at cost less impairment losses.
The fair value of financial instruments available for sale is their quoted price at the reporting date.
Financial instruments classified as available for sale are recognized / derecognised by the Company on the date it commits to purchase / sell the instruments.
Trade receivables of the Company are not traded in an active market. They are included in current assets except for maturities greater than 12 months and are classified as loans and receivables. Trade receivables and other receivables are initially recognized at fair value plus transaction costs that are directly attributable to the acquisition or origination of the financial asset. Subsequently, loans and receivables are measured at amortized cost using the effective interest rate method, less impairment, if any. The effective interest rate is the rate that exactly discounts the estimated future cash payments and receipts through the expected life of the financial assets or liability (or, where appropriate, a shorter period) to carrying amount of the financial asset and liability. Short-term receivables are not discounted.
Borrowings are initially recognized at fair value. Subsequent to initial recognition, liabilities are stated at amortized cost on an effective interest method basis. Trade payables are initially recognized at fair value and are subsequently measured at amortized cost. Shortterm liabilities are not discounted.
Inventories are stated at the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses. The cost of inventories is based on the first-in first-out principle and includes expenditure incurred in acquiring the inventories and bringing them to their existing location and condition. In the case of manufactured inventories and work in progress, cost includes an appropriate share of overheads based on normal operating capacity.
Cash includes cash on hand and cash in banks. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash with original maturities of three months or less and that are subject to an insignificant risk of change in value.
For purposes of the cash flow statement, cash and cash equivalents comprise cash on hand, deposits held at call in banks, other short-term highly liquid investments.
The carrying amounts of the Company's assets, other than inventories and deferred tax asset, are reviewed at each reporting date in order to determine whether there is any indication of impairment. If any such indication exists, the asset's recoverable amount is estimated.
For goodwill and intangible assets that are not yet available for use, the recoverable amount is estimated at each reporting date.
An impairment loss is recognized whenever the carrying amount of an asset or its cashgenerating unit exceeds its recoverable amount. Impairment losses are recognized in the statement of comprehensive income.
The recoverable amount of non-financial assets is the greater of their fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash -generating unit to which the asset belongs.
Impairment of goodwill is not reversed. Impairment loss in respect of other assets is reversed only if there is an indication that the impairment loss may no longer exist and there has been a change in the estimates used to determine the recoverable amount.
An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.
In the case of equity securities classified as available-for-sale, a significant or prolonged decline in the fair value of the security below its cost is considered an indicator that the securities are impaired. When a decline in the fair value of an available-for-sale financial asset has been recognized through other comprehensive income to equity and there is objective evidence that the asset is impaired, the cumulative loss that had been recognized in equity is recognized in profit or loss even though the financial asset has not been derecognised. The amount of the cumulative loss that is recognized in profit or loss is the difference between the acquisition cost and current fair value, less any impairment loss on that financial asset previously recognized in profit or loss.
The recoverable amount of the Company's loans and receivables carried at amortized cost is calculated as the present value of estimated future cash flows, discounted at the original effective interest rate (i.e., the effective interest rate computed at initial recognition of these financial assets).
An impairment loss in respect of receivables carried at amortized cost is reversed if the subsequent increase in recoverable amount can be related objectively to an event occurring after the impairment loss was recognized.
An impairment loss in respect of an investment in an equity instrument classified as available-for-sale is not reversed through the statement of comprehensive income.
When share capital recognized as equity is repurchased, the amount of the consideration paid, including directly attributable costs, is recognized as a change in equity. Repurchased shares are classified as treasury shares and presented as a deduction from total equity.
Dividends are recognized as a liability in the period in which they are declared.
Withholding taxes that arise from the distribution of dividends are recognized at the same time as the liability to pay the related dividend.
A provision is recognized if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits, which can be reliably estimated, will be required to settle the obligation. The amount recognized as a provision is the best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of resources embodying economic benefits will be required to settle the obligation the provision is reversed. The provision is used only for expenditures for which the provision was originally recognized. When the effect of the time value of money is material, the amount of the provision is the present value of the expenditure expected to be required to settle the obligation. If the discounting method is applied, the increase of provisions with time is recognized as financial expenses.
Short-term employee benefits are recognized as a current expense in the period when employees render the services. These include salaries and wages, social security contributions, bonuses, payable holidays and other benefits. There are no long-term employee benefits. All pension obligations are borne by the State.
Termination benefits are payable whenever an employee's employment is terminated before the normal retirement date or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Company recognizes termination benefits when it is firmly committed to either terminate the employment of current employees according to a detailed formal plan without possibility of withdrawal or to provide termination benefits as a result of an offer made to encourage voluntary redundancy.
Revenue from the sale of goods is recognized in profit or loss when the significant risks and rewards of ownership have been transferred to the buyer. The revenue recognized is net of discounts provided. Revenue from services rendered is recognized in profit or loss in proportion to the stage of completion of the transaction at the reporting date. Rental income is recognized in profit or loss on a straight-line basis over the term of the lease.
No revenue is recognized if there are significant uncertainties regarding recovery of the consideration due, associated costs or the possible return of goods exists or where substantial risks and rewards cannot be considered as transferred to the buyer.
A government grant is recognized in the statement of financial position when there is reasonable assurance that it will be received and that the Company will comply with the conditions attaching to it. Government grants intended to compensate the Company for expenses incurred are recognized as revenue in profit or loss on a systematic basis in the same periods in which the expenses are incurred. Government grants that compensate the Company for the cost of an asset are recognized in the statement of comprehensive income as other operating income on a systematic basis over the useful life of the asset.
Payments made under operating leases are recognized in profit or loss on a straight-line basis over the term of the lease.
Minimum lease payments are apportioned between the finance charge and the reduction of the outstanding liability. The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.
Other operating income and charges comprise gains and losses from sale of property, plant and equipment, and other items, which are not directly related to the primary activities of the Company.
Finance costs comprise interest payable on borrowings calculated using the effective interest rate method and foreign exchange losses. The interest expense component of finance lease payments is recognized in profit or loss using the effective interest rate method.
Finance income comprises interest receivable on funds invested, dividend income and foreign exchange gains. Interest income is recognized in profit or loss as it accrues, using the effective interest method. Dividend income is recognized in profit or loss on the date the entity's right to receive payments is established.
Income tax comprises current and deferred tax. Income tax is recognized in profit or loss except to the extent that it relates to items recognized directly in equity, in which case it is recognized in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.
Deferred tax is provided for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: initial recognition of assets or liabilities that affect neither accounting nor taxable profit, and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the reporting date.
A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realized.
Basic earnings per share is calculated by dividing net profit attributable to ordinary equity holders by the weighted average number of ordinary shares. As there are no instruments that dilute equity, the basic and diluted earnings per share do not differ.
An operating segment is a component of an entity that engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the same entity), whose operating results are regularly reviewed by the entity's chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available.
In its activities the Company is exposed to various financial risks: market risk (including currency risk, interest rate risk, fair value and price risks), credit risk and liquidity risk. General risk management policy establishment and supervision is the responsibility of the Board of directors. Risk management policy was set up in order to identify and analyze risks facing the Company, and determine risk acceptance limits. Risk management policy and processes are reviewed regularly considering changes in the markets and activities of the Company. The Company, applying learning and management standards and procedures, aims to establish constructive control environment where all employees clearly realize their functions and responsibilities. The Company's management pays the greatest attention to unpredictability of financial markets and aims to decrease its eventual impact on the Company's financial performance. From time to time the Company can use a derivative financial instrument in order to hedge certain risks.
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Company's income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.
Currency risk relates to sales and receivables, purchases and payables, borrowings and borrowing costs denominated in currencies other than Litas and Euro (Litas is pegged to Euro at a fixed exchange rate of 3,4528 LTL / EUR). There are no other material monetary items denominated in currencies other than Litas and Euro. Sensitivity analysis is presented in note 20.
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company's receivables from customers.
The Company has established procedures ensuring that sales are made to customers having a proper credit history without exceeding the limit of credit risk set by management. The company has a significant concentration of credit risk on the basis of individual of customers, which is disclosed in note 20. The carrying amount of financial assets represents the maximum credit exposure, refer to note 20.
A conservative management of liquidity risk enables the company to maintain sufficient cash and cash equivalents or have available funding through an adequate amount of committed credit facilities. Liquidity risk analysis is presented in the note 20.
The Company's borrowings are subject to variable interest rates, related to LIBOR, VILIBOR or EURIBOR. The cash flow sensitivity analysis is presented in the note 20.
The Board's policy is to keep the shareholders' equity over borrowings at the level to maintain the confidence of investors, creditors and the market and to fund business development opportunities in the future. The Board keeps track on the ratios of capital return and makes suggestions regarding proposed dividends.
The Board also seeks to maintain a balance between the higher returns that might be possible with higher levels of borrowings and the security afforded by a sound capital position.
The Company manages its capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of its activities. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes during the years ended 31 December 2012 and 31 December 2011.
According to the Companies Law of the Republic of Lithuania, the Company's equity shall be not less than 50% of its share capital.
The accounting policies applied by the Company to all financial information reported in these financial statements are consistent with the accounting policies of the previous year. New IFRS's which became effective in 2012 did not have material impact on the financial statements.
New and revised International Financial Reporting Standards and interpretations have been issued, which will be effective for financial reporting periods starting from 1 January 2013 or later. The Company has decided not to early adopt the new standards and interpretations. Estimates of the possible effect of the new and revised standards applied for the first time, as presented by the Company's management, are stated below.
• Amendments to IFRS 7 Disclosures - Offsetting Financial Assets and Financial Liabilities (effective for annual periods beginning on or after 1 January 2013):
The Amendments contain new disclosure requirements for financial assets and liabilities that are:
The Company does not expect the Amendments to have any impact on the financial statements since it does not apply offsetting to any of its financial assets and financial liabilities and it has not entered into master netting arrangements.
• IFRS 10 Consolidated Financial Statements and IAS 27 (2011) Separate Financial Statements (effective for annual periods beginning on or after 1 January 2014).
The Company does not expect the new standard to have any impact on the financial statements, as it has no investees and does not prepare consolidated financial statements.
• IFRS 11 Joint Arrangements (Effective for annual periods beginning on or after 1 January 2014). The standard supersedes and replaces IAS 31, Interest in Joint Ventures. IFRS 11 does not introduce substantive changes to the overall definition of an arrangement subject to joint control, although the definition of control, and therefore indirectly of joint control, has changed due to IFRS 10.
Under the new Standard, joint arrangements are divided into two types, each having its own accounting model defined as follows:
IFRS 11 effectively carves out from IAS 31 jointly controlled entities those cases in which, although there is a separate vehicle for the joint arrangement, separation is ineffective in certain ways. These arrangements are treated similarly to jointly controlled assets/operations under IAS 31, and are now called joint operations. The remainder of IAS 31 jointly controlled entities, now called joint ventures, are stripped of the free choice of equity accounting or proportionate consolidation; they must now always use the equity method in its consolidated financial statements.
The Company does not expect the new Standard will have a material impact on the financial statements since it is not a party to any joint arrangements.
• IFRS 12 Disclosure of Interests in Other Entities (effective for annual periods beginning on or after 1 January 2014). The standard requires additional disclosures relating to significant judgments and assumptions made in determining the nature of interests in an entity or arrangement, interests in subsidiaries, joint arrangements and associates and unconsolidated structured entities.
The Company does not expect the new Standard will have a material impact on the financial statements.
• IFRS 13 Fair Value Measurement (effective prospectively for annual periods beginning on or after 1 January 2013). The standard replaces the fair value measurement guidance contained in individual IFRSs with a single source of fair value measurement guidance. It defines fair value, establishes a framework for measuring fair value and sets out disclosure requirements for fair value measurements. IFRS 13 explains 'how' to measure fair value when it is required or permitted by other IFRSs. The standard does not introduce new requirements to measure assets or liabilities at fair value, nor does it eliminate the practicability exceptions to fair value measurements that currently exist in certain standards.
The standard contains an extensive disclosure framework that provides additional disclosures to existing requirements to provide information that enables financial statement users to assess the methods and inputs used to develop fair value measurements and, for recurring fair value measurements that use significant unobservable inputs, the effect of the measurements on profit or loss or other comprehensive income.
The entity does not expect IFRS 13 to have material impact on the financial statements since management considers the methods and assumptions currently used to measure the fair value of assets to be consistent with IFRS 13.
The amendments may be relevant to the Company's financial statements.
• Amendments to IAS 12: Deferred Tax: Recovery of Underlying Assets (Effective for annual periods beginning on or after 1 January 2013). The amendments introduce a rebuttable presumption that the carrying value of investment property measured using the fair value model would be recovered entirely by sale. Management's intention would not be relevant unless the investment property is depreciable and held within a business model whose objective is to consume substantially all of the asset's economic benefits over the life of the asset. This is the only instance in which the presumption can be rebutted.
The amendments are not relevant to the Company's financial statements, since it does not have any investment properties measured using the fair value model in IAS 40.
• IAS 19 (2011) Employee Benefits (Effective for annual periods beginning on or after 1 January 2013). The amendment requires actuarial gains and losses to be recognized immediately in other comprehensive income. The amendment removes the corridor method previously applicable to recognizing actuarial gains and losses, and eliminates the ability for entities to recognize all changes in the defined benefit obligation and in plan assets in profit or loss, which currently is allowed under the requirements of IAS 19. The amendment also requires the expected return on plan assets recognized in profit or loss to be calculated based on rate used to discount the defined benefit obligation.
The amendments are not relevant to the entity's financial statements, since the entity does not have any defined benefit plans.
• IAS 28 (2011) Investments in Associates and Joint Ventures (Amendments effective for annual periods beginning on or after 1 January 2014. Earlier application is permitted if IFRS 10, IFRS 11, IFRS 12 and IAS 27 (2011) are also applied early.). There are limited amendments made to IAS 28 (2008):
The entity does not expect the amendments to Standard to have material impact on the financial statements since it does not have any investments in associates or joint ventures that will be impacted by the amendments.
• Amendments to IAS 32 – Offsetting Financial Assets and Financial Liabilities (Effective for annual periods beginning on or after 1 January 2014). The amendments do not introduce new rules for offsetting financial assets and liabilities; rather they clarify the offsetting criteria to address inconsistencies in their application.i6
The Amendments clarify that an entity currently has a legally enforceable right to set-off if that right is:
The entity does not expect the Amendments to have any impact on the financial statements since it does not apply offsetting to any of its financial assets and financial liabilities and it has not entered into master netting arrangements.
• IAS 27 (2011) Separate Financial Statements (Effective for annual periods beginning on or after 1 January 2014. Earlier application is permitted if IFRS 10, IFRS 11, IFRS 12 and IAS 28 (2011) are also applied early).
IAS 27 (2011) carries forward the existing accounting and disclosure requirements of IAS 27 (2008) for separate financial statements, with some minor clarifications. As well, the existing requirements of IAS 28 (2008) and IAS 31 for separate financial statements have been incorporated into IAS 27 (2011). The Standard no longer addresses the principle of control and requirements relating to the preparation of consolidated financial statements, which have been incorporated into IFRS 10, Consolidated Financial Statements.
The Company does not expect IAS 27 (2011) to have material impact on the financial statements, since it does not results in a change in the entity's accounting policy.
Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equate to the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.
The carrying amounts of property, plant and equipment are reviewed at each reporting date in order to determine whether there is any indication of impairment. If any such indication exists, the asset's recoverable amount is estimated. With a purpose of impairment testing, the assets which, in the process of continuous use, generate cash and mainly are independent of generating cash inflows of other assets or asset groups (cash generating units) are classified to the smallest group.
The recoverable amount of property, plant and equipment is the greater of their fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash- generating unit to which the asset belongs.
The fair values of land and buildings are assessed at each reporting date in order to determine whether there are any significant differences between fair values and carrying amounts in the financial statements. Fair values are assessed by reference to valuation reports or market assumptions reports received from external valuators.
The Company reviews its receivables individually to assess impairment at least on a quarterly basis. In determining whether an impairment loss should be recognized, the Company makes judgments as to whether there is any observable data indicating that there is a measurable decrease in the estimated future cash flows from an individual debtor, e.g. adverse change in the payment status of the debtor, etc.
Useful lives of the assets are reviewed at least annually. They are adjusted, if necessary, considering technological changes, expected future use of the asset and its present condition.
The Company recognizes deferred tax assets based on the judgment of management that realization of the related tax benefits through future taxable profits is probable. Management's judgments are based on internal budgets and forecasts.
The only operating segment of the Company is production of dairy products.
Geographical information may be presented as follows (revenue is presented based on the geographical location of customers, and property, plant and equipment are presented according to their location):
| Lithuania | Other EU countries |
Non EU countries |
Total | |
|---|---|---|---|---|
| Revenue | 334 787 | 105 436 | 328 866 | 769 089 |
| Property, plant and equipment | 195 146 | 2 127 | 197 273 | |
| Other non-current assets | 990 | 990 |
The Company has one client from whom revenue in 2012 made over 10% of the total revenue. Revenue earned from this customer amounted to 13% of the Company's total revenue.
| Lithuania | Other EU countries |
Non EU countries |
Total | |
|---|---|---|---|---|
| Revenue | 327 354 | 99 153 | 274 417 | 700 924 |
| Property, plant and equipment | 178 134 | 3 032 | - | 181 166 |
| Other non-current assets | 1 301 | - | - | 1 301 |
The Company had one customer from which revenue in 2011 accounted for more than 10% of the total revenue for the year. Revenue earned from this customer amounted to 14% of the total revenue.
| Other operating income: | ||
|---|---|---|
| Thousand Litas | 2012 | 2011 |
| Income from rent and other services | 1 283 |
1 130 |
| Net gain on disposal of property, plant and equipment | 261 | 494 |
| Other | 57 | 64 |
| 1 601 | 1 688 | |
| Other operating expenses: | ||
| Thousand Litas | 2012 | 2011 |
| Rent and other services related expenses | (918) | (911) |
| (918) | (911) | |
| Thousand Litas | 2012 | 2011 |
|---|---|---|
| Staff costs | (37 599) | (34 584) |
| Marketing and advertising | (12 192) | (9 679) |
| Fuel | (8 247) | (7 424) |
| Depreciation and amortization | (8 187) | (10 279) |
| Production delivery costs | (6 537) | (5 798) |
| Materials and spare parts | (4 275) | (4 173) |
| Utilities | (3 236) | (3 110) |
| Support | (2 750) | (1 868) |
| Repair | (2 470) | (2 334) |
| Taxes, except income tax | (2 246) | (2 186) |
| Security costs | (1 782) | (1 787) |
| Operating lease | (1 543) | (1 225) |
| Insurance | (813) | (1 088) |
| Communications | (699) | (597) |
| Payments to board members | (540) | (420) |
| Transport | (215) | (253) |
| Receivables write-off |
(58) | (238) |
| Office consumables | (66) | (64) |
| Other | (14 112) | (11 742) |
| (107 567) | (98 849) | |
| Sales costs | (67 016) | (58 306) |
| Administrative costs | (40 551) | (40 543) |
| (107 567) | (98 849) | |
| 4. Finance income |
||
| Thousand Litas | 2012 | 2011 |
| Penalties and fines | 276 | 308 |
| Interest | 58 | 60 |
| Other | 11 | - |
Total finance income 345 368
| 5. Finance expenses |
||
|---|---|---|
| Thousand Litas | 2012 | 2011 |
| Interest on loans and leasing liabilities | (3 878) | (4 012) |
| Change in fair value of interest rate swap | (1 383) | (147) |
| Loss on foreign currency exchange | (59) | (54) |
| Other | (98) | (332) |
| Total finance expenses | (5 418) | (4 545) |
| Thousand Litas | 2012 | 2011 |
|---|---|---|
| Income tax for the current year Change in deferred tax |
(5 068) (34) |
(4 843) 532 |
| Total income tax expenses | (5 102) | (4 311) |
| Thousand Litas | 2012 | 2011 | |||
|---|---|---|---|---|---|
| Profit before tax | 34 168 | 29 996 | |||
| Income tax using the prevailing tax rate | 15% | (5 125) | 15% | (4 499) | |
| Non-deductible expenses | 1.1% | (413) | 3,1% | (943) | |
| Non-taxable income | (0.1%) | 41 | - | - | |
| Support (deducted twice) |
(1.2%) | 429 | (2%) | 599 | |
| 14.8% | (5 068) | 16,1% | (4 843) |
Basic earnings per share ratio is calculated dividing the net profit for the year by the average number of ordinary shares outstanding during the year. There are no potential ordinary shares to be issued.
| 2012 | 2011 | |
|---|---|---|
| Number of shares in issue calculated using weighted average | ||
| method, thousand units | 50 135 | 50 643 |
| Net result for the year, in thousand Litas | 29 066 | 25 685 |
| Basic earnings per share, in Litas | 0,57 | 0,51 |
| Diluted earnings per share, in Litas | 0,57 | 0,51 |
| Machinery | |||||
|---|---|---|---|---|---|
| Thousand Litas | Land and | and | Other | Construction | |
| buildings | equipment | assets | in progress | Total | |
| Cost/revaluation | |||||
| Balance at 1 January 2011 | 99 559 | 250 365 | 74 820 | 2 846 | 427 590 |
| Revaluation | - | - | - | - | - |
| Acquisitions | 314 | 15 680 | 2 314 | 5 085 | 23 393 |
| Disposals and write-offs | (531) | (7 246) | (3 693) | - | (11 470) |
| Re-classification | 3 841 | 1 888 | 236 | (5 965) | 0 |
| Balance at 31 December 2011 | 103 183 | 260 687 | 73 677 | 1 966 | 439 513 |
| Balance at 1 January 2012 | 103 183 | 260 687 | 73 677 | 1 966 | 439 513 |
| Revaluation | (21 899) | - | - | - | (21 899) |
| Acquisitions | 200 | 29 181 | 10 729 | 5 578 | 45 688 |
| Disposals and write-offs | (24) | (2 390) | (2 134) | - | (4 548) |
| Re-classification | 5 091 | 1 202 | 68 | (6 361) | 0 |
| Adjustments | (464) | - | - | (464) | |
| Balance at 31 December 2012 | 86 087 | 288 680 | 82 340 | 1 183 | 458 291 |
| Depreciation | |||||
| Balance at 1 January 2011 | 14 192 | 177 276 | 43 895 | 0 | 235 363 |
| Depreciation for the year | 4 907 | 20 703 | 7 439 | - | 33 049 |
| Depreciation of disposals | (214) | (7 098) | (3 217) | - | (10 529) |
| Re-classification | - | - | - | - | - |
| Balance at 31 December 2011 | 18 885 | 190 881 | 48 117 | 0 | 257 883 |
| Balance at 1 January 2012 | 18 885 | 190 881 | 48 117 | 0 | 257 883 |
| Revaluation | (24 233) | (24 233) | |||
| Depreciation for the year | 4 966 | 19 573 | 7 275 | 0 | 31 814 |
| Depreciation of disposals | (9) | (2 313) | (2 124) | 0 | (4 446) |
| Re-classification | 391 | (391) | 0 | ||
| Balance at 31 December 2012 | 0 | 207 750 | 53 268 | 0 | 261 018 |
| Impairment | |||||
| Balance at 1 January 2011 | 464 | 0 | 0 | 0 | 464 |
| Re-classification | - | - | - | - | - |
| Balance at 31 December 2011 | 464 | 0 | 0 | 0 | 464 |
| Balance at 1 January 2012 | 464 | 464 | |||
| Adjustment | (464) | (464) | |||
| Balance at 31 December 2012 | 0 | 0 | 0 | 0 | 0 |
| Carrying amounts | |||||
| 1 January 2011 | 84 903 | 73 089 | 30 925 | 2 846 | 191 763 |
| 31 December 2011 | 83 834 | 69 806 | 25 560 | 1 966 | 181 166 |
| 1 January 2012 | 83 834 | 69 806 | 25 560 | 1 966 | 181 166 |
| 31 December 2012 | 86 087 | 80 930 | 29 072 | 1 183 | 197 273 |
The Company carried out the revaluation of buildings as at 31 December 2004. An increase in the value of the buildings amounting to 4,796 tLTL was recorded in a revaluation reserve within equity as at 31 December 2004 net of deferred tax of 730 tLTL. A decrease in the value of buildings amounting to 8,050 tLTL was recorded in profit or loss in year 2004.
As at 31 December 2007 the Company performed another revaluation of its buildings. An increase in the value of 18,381 tLTL (net of deferred tax liability of 2,755 tLTL) was recognized in equity under the revaluation reserve. An increase in value of the buildings amounting to 1,721 tLTL was recognized in profit or loss for 2007 as reduction of costs because prior to 1 January 2007 an impairment loss was recognized for the mentioned assets. The impairment loss of the assets amounted to 1,007 tLTL and was recognized as expenses in profit or loss for 2007. The revaluation was performed based on the fair values determined by external valuators applying the comparative transactions method.
As at 31 December 2012 valuation of buildings and land was performed by independent valur UAB Matininkai. Valuation was performed applying the comparative transactions method. As a result, the total increase in value of 2 334 tLTL was determined. The revaluation increase was recognized by crediting revaluation reserve (1 984 tLTL) and deferred tax liability (350 tLTL). In connection with revaluation the accumulated depreciation as of 31 December 2012 of revalued buildings and land was eliminated against acquisition cost.
Should the Company have continued to account for the land and buildings using the acquisition cost method, the carrying amount of the land and buildings as at 31 December 2012 would have amounted to 72 641 tLTL (2011 – 73 535 tLTL).
Property, plant and equipment with a carrying amount of 68 813 tLTL as at 31 December 2012 (2011 - 49 846 tLTL), have been pledged to secure the bank loans (note 16).
The Company has acquired machinery and equipment, transport vehicles and other assets by way of financial lease. During the year 2011 the Company has repaid all the leasing liabilities.
Depreciation is included in the following items of profit or loss:
| Thousand Litas | 2012 | 2011 |
|---|---|---|
| Cost of sales Sales and administrative expenses |
24 728 8 115 |
20 800 10 279 |
| 32 843 | 31 079 |
The remaining part of the depreciation, amounting to 1,305 tLTL, is included in the carrying amount of inventories as at 31 December 2012 (2011 – 2,334 tLTL).
Acquisition cost of fully depreciated property, plant and equipment in use amounts to 158,408 tLTL as at 31 December 2012 (2011 – 136,525 tLTL).
| Thousand Litas | Goodwill | Software, etc | Total |
|---|---|---|---|
| Cost | |||
| Balance at 1 January 2011 | 335 | 6 129 | 6 464 |
| Acquisitions | - | 66 | 66 |
| Write-offs | - | (1 145) | (1 145) |
| Balance at 31 December 2011 | 335 | 5 050 | 5 385 |
| Balance at 1 January 2012 | 335 | 5 050 | 5 385 |
| Acquisitions | - | 82 | 82 |
| Write-offs Balance at 31 December 2012 |
- 335 |
(20) 5 112 |
(20) 5 447 |
| Amortization and impairment |
|||
| Balance at 1 January 2011 | - | 5 266 | 5 266 |
| Amortization for the year |
- | 340 | 340 |
| Impairment for the year | 24 | - | 24 |
| Amortization of written-off assets |
- | (1 144) | (1 144) |
| Balance at 31 December 2011 | 24 | 4 462 | 4 486 |
| Balance at 1 January 2012 | 24 | 4 462 | 4 486 |
| Amortization for the year |
- | 243 | 243 |
| Impairment for the year | 24 | - | 24 |
| Amortization of written-off assets |
- | (20) | (20) |
| Balance at 31 December 2012 | 48 | 4 685 | 4 733 |
| Carrying amounts | |||
| 1 January 2011 | 335 | 863 | 1 198 |
| 31 December 2011 | 311 | 588 | 899 |
| 1 January 2012 | 311 | 588 | 899 |
| 31 December 2012 | 287 | 427 | 714 |
Amortization is included in the sales and administrative expenses.
Goodwill amounting to 287 tLTL as at 31 December 2012 arose from the acquisition of AB Panevėžio Pienas. In 2004 AB Panevėžio Pienas was merged to AB Pieno Žvaigždės.
Acquisition cost of fully amortized intangible assets in use amounts to 4,157 tLTL as at 31 December 2012 (2011 – 2,742 tLTL).
| Thousand Litas | 2012 | 2011 |
|---|---|---|
| Investments available for sale | 276 | 276 |
| 276 | 276 |
The major part of investments available for sale as at 31 December 2012 includes shares of UAB Kapitalo Srautai (representing 15.3% ownership interest). UAB Kapitalo Srautai is engaged in financial brokerage activities. Due to the fact that the fair value of the mentioned shares cannot be reliably estimated, they are stated at acquisition cost, which amounts to 200 tLTL. The other available for sale investments are also stated at cost due to absence of reliable estimate of their fair value.
| 11. Inventories |
||
|---|---|---|
| Thousand Litas | 2012 | 2011 |
| Raw materials | 19 077 | 18 114 |
| Work in progress | 24 955 | 46 693 |
| Finished goods | 10 557 | 10 663 |
| Goods for re-sale | 553 | 255 |
| 55 142 | 75 725 |
Raw materials include milk and other materials used in production.
Inventories recognized as costs during the year can be specified as follows:
| Cost of sales (manufactured goods sold) | (622 964) | (568 679) |
|---|---|---|
| Sales and administrative expenses (consumption of inventories) | (12 522) | (12 172) |
| Other operating expenses (sold raw materials, spare parts) | (398) | (38) |
| (635 884) | (580 889) |
Sales and administrative expenses include consumed fuel and spare parts.
Other operating costs include cost of re-sold goods and cost of sold raw materials and other inventories.
Inventories with the carrying amount of up to 55,142 tLTL as at 31 December 2012 (2011 – 75,725 tLTL) have been pledged to secure the bank loans (note 16).
| Thousand Litas | 2012 | 2011 |
|---|---|---|
| Trade receivables | 74 822 | 69 213 |
| Prepayments and loans | 1 452 |
437 |
| Other receivables and deferred expenses | 1 477 | 2 405 |
| Receivable VAT | 2 037 | 1 183 |
| 79 788 | 73 238 | |
| Impairment of receivables | - | - |
| 79 788 | 73 238 |
Written-off receivables recognized in profit and loss for 2012 (refer to note 3) comprises written-off bad trade receivables amounting to 58 tLTL (2011 - 238 tLTL) identified during 2012.
Specification of prepayments and loans may be presented as follows:
| Thousand Litas | 2012 | 2011 |
|---|---|---|
| Prepayments for delivery of raw milk | 368 | 410 |
| Loans to management and employees | 315 | - |
| Other prepayments | 769 | 153 |
| 1 452 | 563 | |
| Less: long-term part | - | (126) |
| 1 452 | 437 |
According to agreements with raw milk suppliers, prepayments for milk shall be covered during the period of up to 5 years as milk is delivered. A fixed rate interest, varying from 5% to 8%, is calculated on the outstanding prepayment amount.
The carrying amount of the receivables approximates the fair value because of their predominantly short-term nature.
As at 31 December 2012 the authorized capital comprised 49,634,419 ordinary shares at par value of 1 Litas each. The Company in 2012 has decreased its authorized capital by canceling treasury shares. All shares are fully paid.
Holders of ordinary shares have one voting right per share at the shareholders meeting and the right to dividends when they are declared, as well as the right to capital repayment in case of a decrease of share capital. There is no controlling entities or individuals among the shareholders of AB Pieno Žvaigždės.
In 2012 the Company purchased 1,000,000 units of its own shares, total amount as at 31 December 2012 comprised 4,570,612 treasury shares (31 December 2011 - 3,570,612). On 27 April 2012, during general shareholders meeting it was decided to cancel 4,570,612 units of treasury shares. Reduction in share capital resulting from cancelation of treasury shares of 15,630 tLTL was recognized directly in equity by reducing the reserve for acquisition of treasury shares.
When treasury shares are purchased, the amount paid, including direct costs, is accounted for as a change in equity. The purchased treasury shares are presented by deducting the amount from the equity. Any profit or loss from disposal of treasury shares is recognized in equity.
Under Lithuanian legislation, an annual allocation to the legal reserve should amount to at least 5% of the net profit until the reserve makes up 10% of the share capital. The reserve can be used only to cover losses.
As at 31 December 2004 the Company established a revaluation reserve of 4,066 tLTL, which is related to the revaluation of buildings as at 31 December 2004. The revaluation reserve is shown net of deferred tax liability amounting to 730 tLTL.
As at 31 December 2007 the Company recognized an additional amount of 15,626 tLTL to the revaluation reserve, related to revaluation of buildings as at that date. The revaluation reserve was decreased by an amount of deferred tax of 2,755 tLTL.
In connection with revaluation of land and buildings as at 31 December 2012 the Company recognized 1 984 tLTL in the revaluation reserve (refer to note 8).
The reserve is decreased in proportion to depreciation and disposal of the revaluation increase. The decrease in reserve is recognized through other comprehensive income as a separate component in equity. When revalued buildings are depreciated a transfer from the revaluation reserve to retained earnings is made. The amount is determined as a difference between the depreciation based on the revalued carrying amount and the depreciation based on the original cost of the buildings.
Other reserves amount to 13,040 tLTL as at 31 December 2012 (in 2011 – 17,420 tLTL). Part of other reserves amounting to 10,000 tLTL (2011 : 16,000 tLTL), has been allocated to acquire treasury shares. Under Lithuanian legislation, this reserve will be retained until the Company purchases its treasury shares.
Dividends per share paid in 2012 were 0.50 LTL (2011: 0.49 LTL).
| 15. Government grants |
||
|---|---|---|
| Thousand Litas | 2012 | 2011 |
| Government grants as at 1 January | 17 687 | 17 055 |
| Additions during the period | - | 632 |
| Government grants as at 31 December | 17 687 | 17 687 |
| Amortization as at 1 January |
13 265 | 12 196 |
| Amortization for the year |
1 235 | 1 069 |
| Amortization as at 31 December |
14 500 | 13 265 |
| Net carrying amount at 1 January | 4 422 | 4 859 |
| Net carrying amount at 31 December | 3 187 | 4 422 |
Amounts received in 2011 from the structural funds' project "Increase of Competitiveness of Milk Processing Activity" were used to acquire special transport vehicles (milk-float) and equipment.
The Company's loans and borrowings are as follows (in thousand Litas):
| Creditor | Ref. | 31-12-2012 | 31-12-2011 |
|---|---|---|---|
| AB SEB Bankas |
a) | - | 523 |
| AB DnB Nord Bankas | b) | - | 4 055 |
| Factoring | c) | 11 133 | 10 578 |
| AB SEB, AB DNB banks | d) | 86 545 | 85 500 |
| AB SEB, AB DNB banks | e) | 23 824 | 20 000 |
| AB SEB Bankas | f) | 16 | - |
| Total liabilities | 121 518 | 120 656 | |
| Less: current part | (60 975) | (28 578) | |
| Total non-current part | 60 543 | 92 078 |
a) The loan (overdraft) was received for working capital needs. The loan has been repaid.
b) The loan (overdraft) was received for working capital needs. The loan has been repaid.
c) The factoring services are being provided by AB SEB Bankas. The maturity is 29 March 2013.
d) The syndicated loan was received from AB DNB Bankas and AB SEB Bankas for financing investments in property, plant and equipment. The loan matures on 21 July 2016.
e) The syndicated credit facility from AB DNB Bankas and AB SEB Bankas to finance the working capital needs. The loan matures on 21 July 2013.
f) A Business Cards account at AB SEB Bankas. The repayment date is 31 August 2013.
All the loans and other financial liabilities as at 31 December 2012 are denominated in EUR or Litas. All interest rates on loans, borrowings and finance leases are variable and consist of LIBOR, EURIBOR or VILIBOR plus a fixed margin. Interest is re-priced every 3 to 6 months depending on the loan/lease agreement and for this reason carrying amounts are assumed to approximate fair values of these loans/leases.
The bank loans are secured by pledging property, plant and equipment with the carrying amount of 68 813 tLTL as at 31 December 2012 (2011 – 49,846 tLTL), inventories with a carrying amount up to 55,142 tLTL (2011 – 75,725 tLTL).
The contractual repayment of loans is as follows:
| Thousand Litas | 2012 | 2011 |
|---|---|---|
| Within 1 year From 1 to 5 years |
60 975 60 543 |
28 578 92 078 |
| Present value of liabilities | 121 518 | 120 656 |
The Company did not have any financial lease agreements in 2012.
Effective interest rates of the loans and finance leases can be presented as follows:
| % | 2012 | 2011 |
|---|---|---|
| Long-term loans | 2,0-3,3 | 2,0 – 4,0 |
| Short-term loans Factoring |
1,8-2,8 2,2-2,8 |
2,0 – 3,0 2,0 – 3,0 |
| Financial lease | - | 2,0 – 4,0 |
Operating lease expenses recognized in profit or loss are as follows:
| Thousand Litas | 2012 | 2011 |
|---|---|---|
| Rent of milk collection premises Operating lease of other assets |
(72) (2 012) |
(73) (1 621) |
| Total operating lease expenses | (2 084) | (1 694) |
Expenses in respect to rent of milk collection premises are recognized under cost of sales. Operating lease of other assets is stated under sales and administrative costs (1 543 tLTL) and cost of finished goods (469 tLTL).
Future minimum lease payments can be presented as follows:
| Thousand Litas | 2013 | 2014 | 2015 | 2016 | 2017 | |
|---|---|---|---|---|---|---|
| Rent of milk collection premises | - | - | - | - | - | |
| Operating lease of other assets | (2 306) | (2 059) | (328) | (44) | (17) | |
| Total operating lease expenses | (2 306) | (2 059) | (328) | (44) | (17) |
Agreements on the rent of milk collection premises do not prescribe any limitations in respect to termination of agreement. Therefore, the Company does not have any long-term liabilities as to these agreements.
The deferred tax assets and liabilities calculated applying the 15% tax are attributed to the following items:
| Thousand Litas | Assets | Liabilities | Net value | |||
|---|---|---|---|---|---|---|
| 2012 | 2011 | 2012 | 2011 | 2012 | 2011 | |
| Property, plant and equipment | - | - | 2 128 | 1 717 | 2 128 |
1 717 |
| Accrued costs | (266) | (239) | - | - | (266) | (239) |
| Tax (asset) / liability | (266) | (239) | 2 128 | 1 717 | 1 862 | 1 478 |
Movements in temporary differences during the year can be presented as follows:
| Thousand Litas | 01-01-2012 | Recognized in profit or loss |
Recognized in equity |
31-12-2012 |
|---|---|---|---|---|
| Property, plant and equipment | 1 717 | 61 | 350 | 2 128 |
| Accrued costs | (239) | (27) | (266) | |
| Tax (asset) / liability | 1 478 | 34 | 350 | 1 862 |
| Thousand Litas | 01-01-2011 | Recognized in profit or loss |
Recognized in equity |
31-12-2011 |
| Property, plant and equipment | 2 180 | (463) | - | 1 717 |
| Accrued costs | (170) | (69) | - | (239) |
| Tax (asset) / liability | 2 010 | (532) | - | 1 478 |
Difference between the tax basis and the carrying amount of property, plant and equipment in the financial statements has occurred mainly due to revaluation of buildings.
| Thousand Litas | 2012 | 2011 |
|---|---|---|
| Payable to suppliers | 48 273 | 45 372 |
| Vacation accrual | 5 677 | 5 218 |
| Taxes and social security contributions payable | 2 414 | 2 483 |
| Salaries payable | 2 133 | 2 030 |
| Other | 1 672 | 2 363 |
| 60 169 | 57 466 |
In order to hedge the risk of cash flow with variable interest rate in 2011 the Company has entered into an interest rate swap agreement with a bank, by which it partly hedges from significant interest rate fluctuations. Notional amount for interest rate swap reduces in proportion to main credit facility. The maturity date of the contract is 26 July 2016. The fair value of the interest rate swap amounts to 1 530 tLTL as at 31 December 2012 (2011: 147 tLTL). Change in fair value during 2012 amounting to 1 383 tLTL is recognized in the profit and loss under finance expenses.
Credit, interest rate and foreign exchange risks arise in the course of the Company's activities carried out on normal business conditions.
The Company has established a credit policy and credit risk is being monitored on a continuous basis. The Company as at reporting date had two clients whose receivables accounted for 29% of the total trade receivables balance. Usual payment terms of trade receivables are 1 to 30 days. For one-off sales the Company requires a prepayment.
Allowance for receivables is determined based on estimated non-recoverable amounts. Allowance is determined individually for each client considering payments received after reporting period end and until date of financial statements preparation.
The carrying amount of financial assets shows the maximum credit risk, which was as follows at the date of the statement of financial position:
| Thousand Litas | Carrying amount | ||
|---|---|---|---|
| 2012 | 2011 | ||
| Short-term receivable amounts | 79 788 | 73 238 | |
| Long-term receivable amounts | - | 126 | |
| Cash and cash equivalents | 4 528 | 1 973 | |
| 84 316 | 75 337 |
The maximum credit risk related to amounts receivable at the reporting date could be distributed per geographic zones in the following way:
| Thousand Litas | Carrying amount | ||
|---|---|---|---|
| 2012 | 2011 | ||
| Lithuania | 35 615 | 34 449 | |
| European Union countries | 9 761 | 8 545 | |
| Russia | 32 562 | 31 046 | |
| Other countries | 1 850 | 1 324 | |
| 79 788 | 73 364 |
The ageing of receivables at the reporting date could be specified as follows:
| Thousand Litas | Gross amount 2012 |
Impairment 2012 |
Gross amount 2011 |
Impairment 2011 |
||
|---|---|---|---|---|---|---|
| Not past due | 62 976 | 63 016 | ||||
| Past due 0-30 days | 15 466 | 7 584 | ||||
| Past due 30-60 days | 876 | 1 608 | ||||
| Past due 61-90 days | 421 | 986 | ||||
| Past due more than | ||||||
| 90 days | 49 | 170 | ||||
| 79 788 | - | 73 364 | - |
Based on the Company's evaluation, no impairment allowance is necessary in respect of receivables past due up to 90 days.
The Company is exposed to foreign currency exchange risk, related to sales, purchases and borrowings denominated in other currencies than Litas or Euro (Litas has been pegged to the Euro at a fixed exchange rate of 3.4528 LTL / EUR and would only be expected to change as a result of government macroeconomic policy). The Company has no material sales and purchases in other currencies than LTL and EUR, therefore currency exchange risk is not significant. The Company does not use any financial instruments for hedging currency exchange risk.
As at 31 December 2012 there are no significant monetary assets and liabilities denominated in other currencies than LTL and EUR. Presentation of monetary items in EUR is as follows:
| Thousand EUR |
2012 | 2011 |
|---|---|---|
| Receivable amounts | 12 685 | 12 010 |
| Cash and cash equivalents | 471 | 201 |
| Interest-bearing loans and borrowings | (31 970) | (30 555) |
| Trade and other amounts payable | (1 791) | (965) |
| (20 605) | (19 309) |
The following are the contractual maturities of financial liabilities, including the estimated interest payments:
| Thousand Litas Financial liabilities |
Carrying amount |
Contrac tual cash flows |
6 months or less |
6-12 months |
1-2 years |
2-5 years | More than 5 years |
|---|---|---|---|---|---|---|---|
| Loans and other financial liabilities | 121 518 | 126 197 | 22 353 | 39 367 | 23 022 | 41 455 | - |
| Derivatives | 1 530 | 1 498 | 383 | 323 | 739 | 53 | - |
| Trade and other payables | 57 755 | 57 755 | 57 755 | - | - | - | - |
| 180 803 | 185 450 | 80 491 | 39 690 | 23 761 | 41 508 | - |
| Thousand Litas Financial liabilities |
Carrying amount |
Contrac tual cash flows |
6 months or less |
6-12 months |
1-2 years |
2-5 years | More than 5 years |
|---|---|---|---|---|---|---|---|
| Loans and other financial liabilities | 120 656 | 129 113 | 21 600 | 10 694 | 45 663 | 51 156 | - |
| Derivatives | 147 | 278 | 50 | 51 | 83 | 88 | 6 |
| Trade and other payables | 54 983 | 54 983 | 54 983 | - | - | - | - |
| 175 786 | 184 374 | 76 633 | 10 745 | 45 746 | 51 244 | 6 |
The effective interest rates applied for discounting the estimated cash flows were as follows:
| 2012 | 2011 | |
|---|---|---|
| Loans and other financial liabilities | 2%-3.3% | 2% - 4% |
The Company's policy is to have sufficient liquidity to meet current operating settlements including repayment of borrowings.
The Company is subject to interest rate cash flow risk because interest-bearing loans are subject to variable interest, related to LIBOR, EURIBOR, VILIBOR.
Interest rates applied on the Company's financial instruments on the reporting date were as follows:
| Thousand Litas | Carrying amount | ||
|---|---|---|---|
| 2012 | 2011 | ||
| Financial instruments bearing fixed interest rate | |||
| None | - | ||
| - |
| Thousand Litas | Carrying amount | ||
|---|---|---|---|
| 2012 | 2011 | ||
| Financial instruments bearing varying interest rate | |||
| AB SEB Bankas | - | 523 | |
| AB SEB Bankas | 16 | - | |
| AB DnB Nord Bankas | - | 4 055 | |
| Factoring | 11 133 | 10 578 | |
| AB SEB, AB NORD | 86 545 | 85 500 | |
| AB SEB, AB NORD | 23 824 | 20 000 | |
| 121 518 | 120 656 |
The interest rate is calculated as VILIBOR, EURIBOR or LIBOR for a certain period plus margin determined by creditor.
A change of 100 basis points in interest rates on the reporting date would have increased (decreased) profit or loss by amounts stated below. This analysis assumes that all other variables, in particular foreign currency exchange rates, remain constant. An analysis for 2011 is made on the same basis.
| Effect in thousand Litas | Profit or loss for the year | |||
|---|---|---|---|---|
| Increase by | Decrease by | |||
| 100 bp | 100 bp | |||
| As at 31 December 2012 | ||||
| Financial instruments on which variable interest rate was applied |
(1 215) | 1 215 | ||
| As at 31 December 2011 | ||||
| Financial instruments on which variable interest rate was | ||||
| applied | (1 207) | 1 207 |
In order to hedge the risk of cash flow with variable interest rate in 2011 the Company has entered into an interest rate swap agreement with a bank, by which it partly hedges from significant interest rate fluctuations (refer to note 19).
The management of the Company is of the opinion that the carrying values of trade and other receivables, trade and other payables as well as borrowings approximate their fair value, because trade and other receivables, trade and other payables are short term while borrowings are from third party lenders and subject to variable interest rates.
As at 31 December 2012 and as at 31 December 2011 the Company did not have any material purchase commitments.
Transactions with related parties can be presented as follows:
| Thousand Litas | 2012 | 2011 | |||||
|---|---|---|---|---|---|---|---|
| Receivable loans |
Receivable loans |
||||||
| Sales | Purchas | Sales | Purchases | ||||
| es | |||||||
| VŠĮ SSK (1) |
2 273 | - | - | 1 027 | - | - | |
| UAB Žaibo Ratas | |||||||
| Vilnius (2) |
- | 421 | - | - | 386 | - | |
| Management (3) |
- | 278 | 300 | - | 252 | - | |
| 2 273 | 699 | 300 | 1 027 | 638 | - |
Amounts payable to the related parties as at 31 December 2012 are as follows: UAB "Žaibo Ratas Vilnius"- 0.4 tLTL (2011 – 14.7 tLTL).
Sales and purchases to/from the related parties were carried out on normal market conditions.
Remuneration of key management personnel is included under the sales and administrative expenses category "Staff costs" (note 3):
| Thousand Litas | 2012 | 2011 |
|---|---|---|
| Remuneration costs of management |
1 835 | 1 690 |
| Remuneration to management, net of tax | 1 065 | 982 |
| Payments to Board members | 540 | 420 |
Remuneration costs of key management personnel comprise calculated salaries and social insurance contributions payable by the Company.
The management consists of: General Director, Deputy General Director, Export Director, General Director of Kauno Pienas branch (starting from 2012) and Finance Director. All the mentioned persons are Board members.
No subsequent events have occurred after the end of the financial year which could have material influence on the financial statements as at 31 December 2012.
There are no significant contingent liabilities related to the Company.
AB Pieno Žvaigždės Annual report for the year 2012
The present Report has been prepared for the financial year 2012.
| Name | AB Pieno Žvaigždės |
|---|---|
| Legal status | Stock Company |
| Registration date | The Company was registered on 23 December 1998 |
| Company code | 1246 65536 |
| VAT payer's code | LT 246655314 |
| Authorized capital |
49 634 419 LTL, comprising 49 634 419 ordinary shares |
| at par value of 1 LTL each. | |
| Address | Perkūnkiemio g. 3, LT-12127 Vilnius, Lithuania |
| Telephone | (+370 5) 246 14 14 |
| Fax | (+370 5) 246 14 15 |
| E-mail address | [email protected] |
| Internet website | www.pienozvaigzdes.lt |
The Company's main activity is production of dairy products.
The company has signed an agreement with the financial brokerage company AB Finasta (VPK license No.: A 087, address: Maironio 11, Vilnius, telephone (8-5) 278 68 33 fax (8-5) 278 68 38) concerning management of securities accounting.
1.5.1. Ordinary shares of AB Pieno Žvaigždės were admitted to the official trading list of NASDAQ OMX Vilnius Stock Exchange. Type of shares – ordinary registered shares; Number of shares – 49 634 419; Total nominal value – 49 634 419 LTL; VP ISIN code – LT0000111676;
1.5.2. At the end of the year 2012 AB Pieno Žvaigždės had no one own shares.
AB Pieno Žvaigždės was established on 23 December 1998 after merger of independent milk processing companies operating in Lithuania: AB Mažeikių Pieninė and AB Pasvalio Sūrinė. Later AB Kauno Pienas and in 2004 AB Panevėžio Pienas were also merged into AB Pieno Žvaigždės. The current structure of the Company enables to specialize production in separate branches and reach the highest efficiency as well as even distribution of raw milk collection capacities in the country.
AB Pieno Žvaigždės is the largest milk processing company in Lithuania, which currently produces more than 500 different products. The Company operates not only in the local market but also exports production to Russia, countries of the European Union, CIS and Baltics. Different types of ferment cheese, whey flour and fresh milk products produced by AB Pieno Žvaigždės are the main products produced for export which are well known for their irreproachable quality. The products are awarded with quality certificates.
The main activity of the Issuer is processing of milk. The mentioned business is risky due to eventual changes in product and raw materials markets, competition as well as eventual legal, political, technological and social changes, which are directly or indirectly related to the Issuer's business and may have a negative influence on the Issuer's cash flows and operating results.
The main raw material used by the Issuer is milk, the sales quota for processing of which to the EU milk processing companies is limited by national milk quota. Limitations put on supply of raw milk may result in lack of raw milk and an increase in prices for raw milk. These changes may have a negative influence on the cash flows and operating results of the Issuer.
The Issuer's business (especially collection and transportation of milk) is a labor consuming activity. The lack of human resources and an increase in salary costs may negatively affect the operating results of the Issuer.
AB Pieno Žvaigždės has integrated the quality and environment management system as to the requirements of ISO 9001:2008 and ISO 14001:2004. As of March 2012 the Company starts implementing the food safety management system as to ISO 22000:2005, which will be integrated into the existing management system.
Assurance of the quality of dairy products, especially of their safety, i.e. harmlessness to consumers, is one of the major tasks of the Company. The functioning food safety system allows to monitor risk factors and important control points that are related to milk production processes, transportation, consumption and improves the quality control. The Company has prepared, implemented and operate the programs which provide for conditions, measures and behavior rules to prevent biological, chemical and physical contamination and ensure high quality and safety of the dairy products. When implementing the food safety system as to ISO 22000:2005, great attention will be paid to one more risk factor – allergen management.
During the years 1998-2002 the State Food and Veterinarian Office assigned the branches of AB Pieno Žvaigždės with certificates for export to EU, which allow to export dairy products bearing identification marks to the EU countries. Furthermore, all the branches of the Company are approved for export to Russia and Belarus.
A primary certification of the quality management system in the Company's affiliates was performed in 2002. The granted certificates proved that the establishment, documentation and maintenance of the quality management system complied with the ISO 9001 standard. The certification audit in the affiliates and issuance of the certificates was performed by an international certification firm TUV CERT.
In 2005 the Company started implementing an environment management system as to ISO 14001. The new system was integrated into the Company's existing quality management system, the system was centralized. In February 2007 an international certification firm TUV CERT performed audits of the environment management system and the quality management system of the Company and evaluated the compliance of these systems to ISO 9001 and ISO 14001. The issued certificate proves that an integrated quality and environment management system has been implemented in the central administration and in all the production affiliates of the Company and is operated it in the following areas: design, creation, production and realization of dairy products. The certification firm TUV CERT reviews the system on an annual basis by performing security audits in the Company's affiliates and recertification audits every three years with an issuance of a new certificate provided the evaluation is positive. Last issued certificate is valid until 10 April 2013.
The Company's integrated quality and environment management system ensures that the organizational structure, responsibilities, processes and procedures are described, the main documents are being controlled and reviewed on an ongoing basis, inspections and control procedures are regularly performed, discrepancies identified, analyzed and corrected, prevention of discrepancies enforced, compliance to legal and other requirements ensured, preventive actions against pollution performed, and efficiency of environmental performance improved on an ongoing basis.
The Company's affiliate Kauno Pienas is certified for production of ecological products (ecological yogurts BIOS and SVALIA, ecological sour cream BIOS, ecological curds and cottage cheese BIOS). After each annual review, a public company Ekoagros issues a new certificate on the Company's compliance with the requirements. Production of ecological dairy products requires to adhere to strict requirements set not only for production processes but also for their compound parts. The certified ecological products are marked with the following additional information: certification mark of ecological products, code of the certifying firm, reference to the growth place of agricultural goods used for production.
Certain products of the Company are assigned with specific quality certificates HALAL (whey powder and cream) and KOSHER (whey powder).
The Company's management has undertaken to produce safe and high-quality dairy products that satisfy the clients' needs and expectations, with low impact on the environment to the maximum extent, all being defined in the Company's policy on the safety and quality of food and environment protection.
| Key figures, million LTL | 2012 12 31 | 2011 12 31 |
|---|---|---|
| Turnover | 769,1 | 700,9 |
| Gross profit | 146,1 | 132,2 |
| Profit before tax, interest and depreciation | ||
| (EBITDA) | 70,1 | 66,5 |
| Profit (loss) before tax | 34,2 | 30,0 |
| Investment in property, plant and | ||
| equipment | 45,8 | 23,3 |
| Average number of employees | 1 988 | 1 937 |
| Raw milk purchased (natural milk), |
||
| thousands tons | 365,0 | 336,9 |
| Milk purchased as to basic ratios, |
||
| thousands tons | 441,6 | 408,7 |
Enjoyment of the ISO 9001 and ISO 14001 certificates proves that the structure, duties and responsibilities are strictly defined in the company, processes and procedures set out, major documents controlled and constantly renewed, checked and that management activities are carried out regularly, while the non-conforming ones are identified, analyzed and corrected, even more, the prevention of environmental is ensured.
Information presented in the financial statements and notes to the financial statements are sufficient, detailed and requires no additional explanation.
At the end of 2012 the Company has purchased no one own share.
At 6 of January 2012 the Company bought 1 000 000 own shares or 1,84% of own capital. The nominal value of bought shares is 1 000 000 LTL. After this buy back the Company has 4 570 612 own shares or 8.43% of own capital. The nominal value of own shares held by the Company amounts to 4 570 612 LTL. On 27 of April 2012 by decision of Annual shareholders meeting all these shares were annulled. Reduced share capital was registered on the 28th of August 2012.
At 6 of January 2012 the Company bought 1 000 000 own shares and paid 5,766 million LTL for these shares.
The shares were acquired aiming to maintain the level of share price in the market.
AB Pieno Žvaigždės comprises four production branches:
No significant events have occurred after the end of the financial year.
AB Pieno Žvaigždės has set the following goals for 2013:
The Company continuously makes investments and searches for new ways how to ensure a constant and better efficiency growth of its activity.
The Company did not use any financial instruments which are important for valuation of the Company's assets, liabilities, financial position and performance results.
The authorized capital registered with the Companies Register Center amounts to 49 634 419 LTL. The authorized capital is divided into 49 634 419 ordinary shares (nominal value 1 LTL). All ordinary registered shares of AB Pieno Žvaigždės are fully paid in.
There are no restrictions applicable on the transfer of securities.
The most recent data about Company's shareholders dated December 31, 2012. The Company had 3 629 shareholders.
The shareholders holding by the right of ownership or in trust more than 5 per cent of the Company's authorized capital are as follows:
| Number of shares, units |
Share of the capital % |
Share of votes with related persons % |
|---|---|---|
| 6 796 775 | 13,69 | 13,69 |
| 6 553 360 | 13,20 | 13,20 |
| 4 700 000 | 9,47 | 9,47 |
| 6 463 405 | 13,02 | 13,02 |
| 7 596 507 | 15,30 | 15,30/33,31 |
| 2 152 359 | 4,34 | 4,34/33,31 |
| 2 842 567 | 5,73 | 6,26/33,31 |
| 1 091 691 | 2,19 | 2,19/33,31 |
| 2 547 123 | 5,13 | 5,13/33,31 |
| 46 150 | 0,09 | 0,09/33,31 |
There are no shareholders having special control rights in the Company.
There are no shareholders in the company, who have restrictions imposed upon the voting rights.
The issuer is not aware about any agreements concluded among the shareholders due to which the securities transfer and (or) voting rights may be restricted.
| 2012 12 31 | 2011 12 31 | |
|---|---|---|
| Average number of employees | 1 988 | 1 937 |
| With university education | 412 | 402 |
| With college education | 530 | 517 |
| With secondary education | 896 | 873 |
| With not completed secondary education | 150 | 145 |
| 2012 12 31 | 2011 12 31 | |
| Average salary, Litas | ||
| Management | 7 627 | 6 597 |
| Specialists | 2 799 | 2 637 |
| Workers | 2 088 | 2 081 |
Articles of Association of AB Pieno Žvaigždės can be changed in accordance with the laws of the Republic of Lithuania.
The managing bodies of the company are as follows: General shareholders' meeting, the Management Board and the General director. The Supervisory Council is not formed in the Company.
The Management Board is a collegial management body comprised of 7 (seven) members. The Board members are elected for the 4 years period. The Board elects the Chairman. The competence of and procedure of announcement of the shareholders' meeting as well the competence, election, recall and other issues related to the Board and the General director are regulated by the Companies Law of the Republic of Lithuania.
The Management Board
| Name, surname | Official duties |
Number shares, units |
Share of the capital % |
From | Until |
|---|---|---|---|---|---|
| Paul Bergqvist |
Chairman | - | - | 2012 04 27 | 2016 04 27 |
| Hans Mideus | Member | - | - | 2012 08 28 | 2016 04 27 |
| Julius Kvaraciejus | Member | 7 596 507 | 15,30 | 2012 04 27 | 2016 04 27 |
| Voldemaras Klovas | Member | 2 842 567 | 5,73 | 2012 04 27 | 2016 04 27 |
| Aleksandr Smagin | Member | 2 547 123 | 5,13 | 2012 04 27 | 2016 04 27 |
| Audrius Statulevičius | Member | - | - | 2012 04 27 | 2016 04 27 |
| Gžegož Rogoža | Member | 46 150 | 0,09 | 2012 04 27 |
2016 04 27 |
| Name, surname | Official duties | Number shares, units |
Share of the capital % |
|---|---|---|---|
| Aleksandr Smagin | CEO | 2 547 123 | 5,13 |
| Audrius Statulevičius | CFO | - | - |
The remuneration amount to key management disclosed in the notes to the financial statements.
3.11. All material agreements to which the issuer is a party and which would come into effect, be amended or terminated in case of change in the issuer's control, also their impact except the cases where the disclosure of the nature of the agreements would cause significant damage to the issuer
There are no such agreements.
3.12. All agreements of the issuer and the members of its management bodies, or the employee agreements providing for a compensation in case of the resignation or in case they are dismissed without a due reason or their employment is terminated in view of the change of the control of the issuer
The Issuer has not entered into agreements with the members of its collegial management bodies and employees prescribing payment of allowances in case of resignation or dismissal without grounded reason or termination of work due to change in control over the Issuer.
(The issuers of equity securities shall additionally present the information on the major related parties' transactions while specifying the amounts of the transactions, the nature of the relations between the parties concerned and other information about the transactions indispensable for the understanding of the financial status of the company where the transactions were material or were concluded under unusual market conditions. The information on individual transactions may be generalized by type of the transactions, except the cases where additional information must be disclosed for the purpose of understanding the impact of the related parties' transactions upon the financial status of the company. The term "related party" shall have the same meaning as used in the accounting standards used by the issuer).
More information on the major related parties' transactions are presented in the Notes to the financial statements.
Information on the compliance with the corporate governance code are presented in the addendum No.1 to the Annual Report.
All the publicly disclosed information is available on the company's web site www.pienozvaigzdes.lt
Pieno Žvaigždės AB, not audited financial results for the first nine months of 2012
Based on preliminary unaudited results Company's sales over nine months in 2012 accounted to LTL 566.9 million (EUR 164.2 million), 8.1% higher compare to a year ago. Sales resulted over nine months in 2011 were LTL 524.4million (EUR 151.9 million). Sales increased in both domestic and export markets. Export volumes increased by 11% and domestic sales increased by 4%.
Over the nine months of the year Company's EBITDA accounted to LTL 50.7 million (EUR 14.7 million) and decreased by 0.6% compare with EBITDA of LTL 51.0 million (EUR 14.8 million) a year ago. The Company earned a net profit of LTL 19.7 million (EUR 5.7 million) or 2.2% less compared to a net profit of LTL 20.2 million (EUR 5.8 million) over same period in 2011.
Implementing Board's approved investment program, company successfully completed modernization of butter production line and invested in this project 22 million Litas (6.4 million EUR).
Information about share capital of Pieno Žvaigždės AB
Please be informed that the Authorized capital of Pieno Žvaigždės is 49,634,419 Litas (EUR 14,375,121.35) which is divided into 49,634,419 ordinary registered shares of the value of 1 Litas (EUR 0.29) per share. All shares are fully paid. Each share provides 1 vote at the General Shareholders' Meeting. And the total number of the votes granted by the issued shares is 49,634,419.
Pieno Žvaigždės AB, not audited financial results for the first six months of 2012
Based on preliminary unaudited results Company's sales over six months in 2012 accounted to LTL 360.9 million (EUR 104.5 million), 7.0% higher compare to a year ago. Sales resulted over six months in 2011 were LTL 337.2 million (EUR 97.7 million). Sales increased in both domestic and export markets. Export volumes increased by 10% and domestic sales increased by 4%.
Over the six months of the year Company's EBITDA accounted to LTL 25.1 million (EUR 7.3 million) and decreased by 19% compare with EBITDA of LTL 31.1 million (EUR 9.0 million) a year ago. The Company earned a net profit of LTL 6.6 million (EUR 1.9 million) or 40% less compared to a net profit of LTL 11.1 million (EUR 3.2 million) over same period in 2011. Decrease of milk products prices in export markets had the major impact on Company's profit decrease.
General Shareholders' Meeting of Pieno Žvaigždės AB
Meeting of Shareholders of Pieno Žvaigždės AB took part on 7 August 2012 at 10.00 am (at corporate headquarters at Perkūnkiemio 3, Vilnius, Lithuania, company code 1246 65536, VAT code LT 246655314, data kept and stored at Legal Registrar) by the decision by the company's Board.
| N | Agenda | Resolutions |
|---|---|---|
| o 1. |
Amendment of the Articles of Association and approval of the new wording Election of |
To approve the new versions of Sections 22 and 27 of the Articles of Association of the Company: "22. The Board is a collegial management body of the Company. The Board of the Company shall be formed from 7 (seven) members for the period of 4 (four) years. The Board shall elect the Chairman of the Board from the members. The fixed-term contracts shall be concluded with the members of the Board on the activities of the members in the Board, which stipulate their rights (including the right to the salary for the activities in the Board of the size indicated in the contract, as well as the material terms and conditions and measures usual in the business practice of the legal entities of the respective size), positions and responsibility. The General Meeting of Shareholders shall establish the size of the salary of the members and the Chairman of the Board and appoint the person who is authorized to sign the contracts with the respective members of the Board in the name of the Company. The Board shall establish a particular salary of every member of the Board, taking into account the total amount given according to the decision of the General Meeting of Shareholders, as well as the principles of establishment of the salary, established by the General Meeting of Shareholders." "27. Public notifications, to be announced according to the Company Law of the Republic of Lithuania and the other laws, shall be announced in an electronic publication for the announcement of public notifications according to the procedure and terms established by the Civil Code of the Republic of Lithuania, the Company Law of the Republic of Lithuania and the other legal acts, issued by the manager of the Register of Legal Entities. The notification of the summoning of the General Meeting of Shareholders shall be announced only according to the procedure established in the Law on Securities of the Republic of Lithuania in the Central Base of Regulated Information." To approve the new version of the Articles of Association (enclosed). To authorize the Manager of the Company Aleksandr Smagin to sign the new version of the Articles of Association. |
| 2. | the new Board member |
To elect Hans Mideus to the Management Board. |
Pieno Žvaigždės AB, not audited financial results for the first three months of 2012
Based on preliminary unaudited results Company's sales over three months in 2012 accounted to LTL 157.9 million (EUR 45.7 million), 4.5% lower compare to a year ago. Sales resulted over three months in 2011 were LTL 165.3 million (EUR 47.9 million). Decrease of demand in export market had the major impact on Company's sales decrease in 2012. Export volumes decreased by 9% and generated proceeds of LTL 79.7 million (EUR 23.1 million) compared to LTL 87.5 million (EUR 25.3 million) a year ago and accounted to 50.5% of total proceeds over the period.
Over the three months of the year Company's EBITDA accounted to LTL 13.8 million (EUR 4.0 million) and decreased by 19% compare with EBITDA of LTL 17.1 million (EUR 4.9 million) a year ago. The Company earned a net profit of LTL 4.3 million (EUR 1.2 million) or 35% less compared to a net profit of LTL 6.7 million (EUR 1.9 million) over same period in 2011.
Annual Meeting of Shareholders of Pieno Žvaigždės AB took place on 27 April 2012 at 11.00 am (at corporate headquarters at Perkūnkiemio 3, Vilnius, Lithuania, company code 1246 65536, VAT code LT 246655314, data kept and stored at Legal Registrar) by the decision by the company's Board.
| No | Agenda | Resolutions |
|---|---|---|
| 1. | Annual Report. | Listened. |
| 2. | Audit report on the company's financial accounts and the Annual Report |
Listened. |
| 3. | Approval of the IAS accounts 2011. |
Approved Company's audited accounts 2011 |
| 4. | Profit distribution and establishment of reserves |
Approved profit distribution and establishment of reserves of Pieno Žvaigždės. (Profit distribution attached) |
| 5. | Election of the Board |
Elected members to the Board for the four years period: Paul Bergqvist (chairman of the board); Julius Kvaraciejus (board member); Aleksandr Smagin (board member) Voldemaras Klovas (board member); Gžegož Rogoža (board member); Audrius Statulevičius (board member) |
| 6. | Election of the Audit Committee members |
Elected members to the Audit Committee for the next year: Jūratė Zarankienė (independent member, chairman of the committee); Danutė Kairevičienė (member of the committee) |
| 7. | Decrease of share capital of Pieno Žvaigždės, voiding of the own bought shares |
Decrease share capital of Pieno Žvaigždės from 54 205 031 Litas to 49 634 419 Litas voiding 4 570 612 of own bought shares. |
| 8. | Amendment of the Articles of Association and approval of the new wording |
Approve the following amendments of the Articles of Association of Pieno Žvaigždės: 11. Share capital of the Company is 49 634 419 (forty nine million six hundred thirty four thousand four hundred nineteen) Litas. 14. Share capital of the Company is divided into 49 634 419 (forty nine million six hundred thirty four thousand four hundred nineteen) common share. Approve new Articles of Association. Authorize Company's CEO to sign new Articles of Association of Pieno Žvaigždės |
(Approved at the annual shareholders meeting, April 27, 2012)
| Items | Amount (in Litas) | Amount (in EUR) |
|---|---|---|
| Profit (loss) brought forward from the end of previous year |
18.312.331 | 5.303.618 |
| Financial year profit (loss) | 25.685.108 | 7.438.921 |
| Transfers from reserves | 1.420.000 | 411.260 |
| Profit to be appropriated | 45.417.439 | 13.153.800 |
| Appropriation of profit: | ||
| – dividends * | 24.817.210 | 7.187.561 |
| – management board bonus |
540.000 | 156.395 |
| – own shares buy back reserve |
10.000.000 | 2.896.200 |
| – to social activities reserve |
2.500.000 | 724.050 |
| Profit ( loss) to be carried forward at the end of the financial year |
7.560.229 | 2.189.594 |
* 0,50 LTL (0,145 EUR) per share.
Pieno Žvaigždės AB, share buy back
Pieno Žvaigždės AB finished share buyback through a way of official offer at NASDAQ OMX Vilnius
Share buyback started: 23 December 2011.
Share buyback ended: 6 January 2012.
Max quantity of shares to be bought back: 1,000,000.
Share buyback price: LTL 1.67 EUR per share.
Actual quantity of bought back shares: 1,000,000.
Total quantity of company's bought back shares 4,570,612 or 8.43% of share capital.
There is no other information that should be disclosed in the annual financial statement under the legal acts governing the activities of companies or other legal acts or the Articles of Association of the Company.
Hereby AB Pieno Žvaigždės disclose its compliance with the Governance Code and its provisions by the NASDAQ OMX following Article 21 paragraph 3 of the Law on Securities of the Republic of Lithuania and item 24.5 of the Listing Regulations of NASDAQ OMX AB.
| PRINCIPLES/ RECOMMENDATIONS | YES/NO /NOT APPLIC ABLE |
COMMENTARY |
|---|---|---|
| Principle I: Basic Provisions | ||
| The overriding objective of a company should be to operate in common interests of all the shareholders by optimizing over time shareholder value. |
||
| 1.1. A company should adopt and make public the company's development strategy and objectives by clearly declaring how the company intends to meet the interests of its shareholders and optimize shareholder value. |
Yes | The Company presents forecasts announcing significant events through the centralized information system, however due to competition in the market, the Company cannot publicly disclose certain strategies in advance. |
| 1.2. All management bodies of a company should act in furtherance of the declared strategic objectives in view of the need to optimize shareholder value. |
Yes | |
| 1.3. A company's supervisory and management bodies should act in close co-operation in order to attain maximum benefit for the company and its shareholders. |
Yes | |
| 1.4. A company's supervisory and management bodies should ensure that the rights and interests of persons other than the company's shareholders (e.g. employees, creditors, suppliers, clients, local community), participating in or connected with the company's operation, are duly respected. |
Yes | |
| Principle II: The corporate governance framework The corporate governance framework should ensure the strategic guidance of the company, the effective oversight of the company's management bodies, an appropriate balance and distribution of functions between the company's bodies, protection of the shareholders' interests. |
| 2.1. Besides obligatory bodies provided for in the Law on Companies of the Republic of Lithuania – a general shareholders' meeting and the chief executive officer, it is recommended that a company should set up both a collegial supervisory body and a collegial management body. The setting up of collegial bodies for supervision and management facilitates clear separation of management and supervisory functions in the company, accountability and control on the part of the chief executive officer, which, in its turn, facilitate a more efficient and transparent management process. |
No | There is no Council in the Company. Control over the Board is performed by General Shareholders Meeting, to which the Board reports. |
|---|---|---|
| ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| 2.2. A collegial management body is responsible for the strategic management of the company and performs other key functions of corporate governance. A collegial supervisory body is responsible for the effective supervision of the company's management bodies. |
Yes | The Board is the collegial management body. |
|---|---|---|
| 2.3. Where a company chooses to form only one collegial body, it is recommended that it should be a supervisory body, i.e. the supervisory board. In such a case, the supervisory board is responsible for the effective monitoring of the functions performed by the company's chief executive officer. |
N/A | The Company has executive body – the Board. |
| 2.4. The collegial supervisory body to be elected by the general shareholders' meeting should be set up and should act in the manner defined in Principles III and IV. Where a company should decide not to set up a collegial supervisory body but rather a collegial management body, i.e. the board, Principles III and IV should apply to the board as long as that does not contradict the essence and purpose of this body. |
Yes | As collegial supervisory body is not formed at the Company the Principle III and IV statements, are applied to the Board as long as it does not contradict to the essence and purpose of such body. |
| 2.5. Company's management and supervisory bodies should comprise such number of board (executive directors) and supervisory (non-executive directors) board members that no individual or small group of individuals can dominate decision-making on the part of these bodies. |
Yes | The Board consists of 7 members who represent interests of shareholders. This number of members is sufficient and ensures that no individual or small group of individuals dominates decision making of the Board |
| 2.6. Non-executive directors or members of the supervisory board should be appointed for specified terms subject to individual re-election, at maximum intervals provided for in the Lithuanian legislation with a view to ensuring necessary development of professional experience and sufficiently frequent reconfirmation of their status. A possibility to remove them should also be stipulated however this procedure should not be easier than the removal procedure for an executive director or a member of the management board. |
Yes | The Board members are elected for maximum 4 year term as per legislation. There are no limitations for re-election. |
| 2.7. Chairman of the collegial body elected by the general shareholders' meeting may be a person whose current or past office constitutes no obstacle to conduct independent and impartial supervision. Where a company should decide not to set up a supervisory board but rather the board, it is recommended that the chairman of the board and chief executive officer of the company should be a different person. Former company's chief executive officer should not be immediately nominated as the chairman of the collegial body elected by the general shareholders' meeting. When a company chooses to departure from these recommendations, it should furnish information on the measures it has taken to ensure impartiality of the supervision. |
Yes | The Company's general manager is not the chairman of the Board. No obstacles for independent and objective supervision exist. |
Principle III: The order of the formation of a collegial body to be elected by a general shareholders' meeting
The order of the formation a collegial body to be elected by a general shareholders' meeting shall ensure representation of minority shareholders, accountability of this body to the shareholders and objective monitoring of the company's operation and its management bodies.
| 3.1. The mechanism of the formation of a collegial body to be elected by a general shareholders' meeting (hereinafter in this Principle referred to as the 'collegial body') shall ensure objective and fair monitoring of the company's management bodies as well as representation of minority shareholders. |
Yes | The Company discloses information of candidates to the Company's collegial body. The shareholders structure does not contain any dominating shareholders. All active shareholder groups have their representatives in the Board. |
|---|---|---|
| 3.2. Names and surnames of the candidates to become members of a collegial body, information about their education, qualification, professional background, positions taken and potential conflicts of interest shall be disclosed early enough before the general shareholders' meeting so that the shareholders would have sufficient time to make an informed voting decision. All factors affecting the candidate's independence, the sample list of which is set out in Recommendation 3.7, shall be also disclosed. The collegial body shall also be informed on any subsequent changes in the provided information. The collegial body shall, on yearly basis, collect data provided in this item on its members and disclose this in the company's annual report. |
Yes | Information about members of collegial body is presented in the annual report of the company. Before election of members of the collegial body, information about them is presented together with the meeting's documentation as per legislation. |
| 3.3. Shall a person be nominated for members of a collegial body, such nomination shall be followed by the disclosure of information on candidate's particular competences relevant to his/her service on the collegial body. In order shareholders and investors are able to ascertain whether member's competence is further relevant, the collegial body shall, in its annual report, disclose the information on its composition and particular competences of individual members which are relevant to their service on the collegial body. |
Yes | Information about members of collegial body is presented in the annual report of the company. Before election of members of the collegial body, information about them is presented together with the meeting's documentation as per legislation. |
| 3.4. In order to maintain a proper balance in terms of the current qualifications possessed by its members, the desired composition of the collegial body shall be determined with regard to the company's structure and activities, and have this periodically evaluated. The collegial body should ensure that it is composed of members who, as a whole, have the required diversity of knowledge, judgment and experience to complete their tasks properly. The members of the audit committee, collectively, should have a recent knowledge and relevant experience in the fields of finance, accounting and/or audit for the stock exchange listed companies. At least one of the members of the remuneration committee should have knowledge of and experience in the field of remuneration policy. |
Yes | Members of the collegial body have extensive experience in the enterprise management, have versatile knowledge and skills for proper execution of duties. |
| 3.5. All new members of the collegial body shall be offered a tailored program focused on introducing a member with his/her duties, corporate organization and activities. The collegial body shall conduct an annual review to identify fields where its members need to update their skills and knowledge. |
Yes | Members of the collegial body have extensive experience in the enterprise management. Shall new candidates be elected, they would be acquainted with the situation in the Company and specifics of management. |
| 3.6. In order to ensure that all material conflicts of interest related with a member of the collegial body are resolved properly, the collegial body shall comprise a sufficient number of independent members. |
Yes | 1/3 of the Board members are independent. |
||
|---|---|---|---|---|
| 3.7. A member of the collegial body shall be considered to be independent only if he is free of any business, family or other relationship with the company, its controlling shareholder or the management of either, that creates a conflict of interest such as to impair his judgment. Since all cases when member of the collegial body is likely to become dependent are impossible to list, moreover, relationships and circumstances associated with the determination of independence may vary amongst companies and the best practices of solving this problem are yet to evolve in the course of time, assessment of independence of a member of the collegial body shall be based on the contents of the relationship and circumstances rather than their form. The key criteria for identifying whether a member of the collegial body can be considered to be independent are the following: 1) He/she is not an executive director or member of the board (if a collegial body elected by the general shareholders' meeting is the supervisory board) of the company or any associated company and has not been such during the last five years; |
Yes | |||
| 2) He/she is not an employee of the company or some any company and has not been such during the last three years, except for cases when a member of the collegial body does not belong to the senior management and was elected to the collegial body as a representative of the employees; |
Yes | |||
| 3) He/she is not receiving or has been not receiving significant additional remuneration from the company or associated company other than remuneration for the office in the collegial body. Such additional remuneration includes participation in share options or some other performance based pay systems; it does not include compensation payments for the previous office in the company (provided that such payment is no way related with later position) as per pension plans (inclusive of deferred compensations); |
||||
| 4) He/she is not a controlling shareholder or representative of such shareholder (control as defined in the Council Directive 83/349/EEC Article 1 Part 1); |
||||
| 5) He/she does not have and did not have any material business relations with the company or associated company within the past year directly or as a partner, shareholder, director or superior employee of the subject having such relationship. A subject is considered to have business relations when it is a major supplier or service provider (inclusive of financial, legal, counseling and consulting services), major client or organization receiving significant payments from the company or its group; |
6) He/she is not and has not been, during the last three years, partner or
| employee of the current or former external audit company of the company or associated company; 7) He/she is not an executive director or member of the board in some |
||
|---|---|---|
| other company where executive director of the company or member of the board (if a collegial body elected by the general shareholders' meeting is the supervisory board) is non-executive director or member of the supervisory board, he/she may not also have any other material relationships with executive directors of the company that arise from their participation in activities of other companies or bodies; |
||
| 8) He/she has not been in the position of a member of the collegial body for over than 12 years; |
||
| 9) He/she is not a close relative to an executive director or member of the board (if a collegial body elected by the general shareholders' meeting is the supervisory board) or to any person listed in above items 1 to 8. Close relative is considered to be a spouse (common law spouse), children and parents. |
||
| 3.8. The determination of what constitutes independence is fundamentally an issue for the collegial body itself to determine. The collegial body may decide that, despite a particular member meets all the criteria of independence laid down in this Code, he cannot be considered independent due to special personal or company-related circumstances. |
Yes | |
| 3.9. Necessary information on conclusions the collegial body has come to in its determination of whether a particular member of the body shall be considered to be independent shall be disclosed. When a person is nominated to become a member of the collegial body, the company shall disclose whether it considers the person to be independent. When a particular member of the collegial body does not meet one or more criteria of independence set out in this Code, the company shall disclose its reasons for nevertheless considering the member to be independent. In addition, the company shall annually disclose which members of the collegial body it considers to be independent. |
Yes | Based on the independency criteria, set in paragraph 3.7., independent members of the Board are: - Paul Bergqvist – Chairman of the Board; - Hans Mideus – Board member; |
| 3.10. When one or more criteria of independence set out in this Code has not been met throughout the year, the company shall disclose its reasons for considering a particular member of the collegial body to be independent. To ensure accuracy of the information disclosed in relation with the independence of the members of the collegial body, the company shall require independent members to have their independence periodically re confirmed. |
Yes | The criteria are met throughout the year |
| 3.11. In order to remunerate members of a collegial body for their work and | Yes | |
|---|---|---|
| participation in the meetings of the collegial body, they may be remunerated | ||
| from the company's funds. The general shareholders' meeting shall approve | ||
| the amount of such remuneration. |
The corporate governance framework shall ensure proper and effective functioning of the collegial body elected by the general shareholders' meeting, and the powers granted to the collegial body shall ensure effective monitoring of the company's management bodies and protection of interests of all the company's shareholders.
| 4.1. The collegial body elected by the general shareholders' meeting (hereinafter in this Principle referred to as the 'collegial body') shall ensure integrity and transparency of the company's financial statements and the control system. The collegial body shall issue recommendations to the company's management bodies and monitor and control the company's management performance. |
Yes | Management submits reports to the collegial body at least once per quarter and gets recommendations. The Board approves the annual report prepared by the management. |
|---|---|---|
| 4.2. Members of the collegial body shall act in good faith, with care and responsibility for the benefit and in the interests of the company and its shareholders with due regard to the interests of employees and public welfare. Independent members of the collegial body shall (a) under all circumstances maintain independence of their analysis, decision-making and actions (b) do not seek and accept any unjustified privileges that might compromise their independence, and (c) clearly express their objections shall a member consider that decision of the collegial body is against the interests of the company. Shall a collegial body have passed decisions independent member has serious doubts about, the member shall make adequate conclusions. Shall an independent member resign from his office, he shall explain the reasons in a letter addressed to the collegial body or audit committee and, if necessary, respective company-not-pertaining body (institution). |
Yes | The Board members perform on their good will on behalf of the company follow the company's interests trying to maintain independency in decision making. |
| 4.3. Each member shall devote sufficient time and attention to perform his duties as a member of the collegial body. Each member of the collegial body shall limit other professional obligations of his (in particular any directorships held in other companies) in such a manner they do not interfere with proper performance of duties of a member of the collegial body. In the event a member of the collegial body shall be present in less than a half of the meetings of the collegial body throughout the financial year of the company, shareholders of the company shall be notified. |
Yes | Members of the collegial body properly fulfill their duties: take active part in sittings and allot sufficient time for execution of duties. All sittings of the collegial body had quorum. |
| 4.4. Where decisions of a collegial body may have a different effect on the company's shareholders, the collegial body shall treat all shareholders impartially and fairly. It shall ensure that shareholders are properly informed on the company's affairs, strategies, risk management and resolution of conflicts of interest. The company shall have a clearly established role of members of the collegial body when communicating with and committing to shareholders. |
Yes |
| 4.5. It is recommended that transactions (except insignificant ones due to their low value or concluded when carrying out routine operations in the company under usual conditions), concluded between the company and its shareholders, members of the supervisory or managing bodies or other natural or legal persons that exert or may exert influence on the company's management shall be subject to approval of the collegial body. The decision concerning approval of such transactions shall be deemed adopted only provided the majority of the independent members of the collegial body voted for such a decision. |
Yes | |
|---|---|---|
| 4.6. The collegial body should be independent in passing decisions that are significant for the company's operations and strategy. Taken separately, the collegial body should be independent of the company's management bodies.10 Members of the collegial body should act and pass decisions without an outside influence from the persons who have elected it. Companies should ensure that the collegial body and its committees are provided with sufficient administrative and financial resources to discharge their duties, including the right to obtain, in particular from employees of the company, all the necessary information or to seek independent legal, accounting or any other advice on issues pertaining to the competence of the collegial body and its committees. When using the services of a consultant with a view to obtaining information on market standards for remuneration systems, the remuneration committee should ensure that the consultant concerned does not at the same time advise the human resources department, executive directors or collegial management organs of the company concerned. |
Yes | Board is provided with sufficient administrative and financial resources to discharge their duties. |
| 4.7. Activities of the collegial body shall be organized in a manner that independent members of the collegial body could have major influence in relevant areas where chances of occurrence of conflicts of interest are very high. Such areas to be considered as highly relevant are issues of nomination of company's directors, determination of directors' remuneration and control and assessment of company's audit. Therefore when the mentioned issues are attributable to the competence of the collegial body, it is recommended that the collegial body shall establish nomination, remuneration, and audit committees. Companies shall ensure that the functions attributable to the nomination, remuneration, and audit committees are carried out. However they may decide to merge these functions and set up less than three committees. In such case a company shall explain in detail reasons behind the selection of alternative approach and how the selected approach complies with the objectives set forth for the three different committees. Shall the collegial body of the company comprise small number of members, the functions assigned to the three committees may be performed by the collegial body itself, provided that it meets composition requirements advocated for the committees and that adequate information is provided in this respect. In such case provisions of this Code relating to the committees of the collegial body (in particular with respect to their role, operation, and transparency) shall apply, where relevant, to the collegial body as a whole. |
No | Only Audit committee established |
| 4.8. The key objective of the committees is to increase efficiency of the activities of the collegial body by ensuring that decisions are based on due consideration, and to help organize its work with a view to ensuring that the decisions it takes are free of material conflicts of interest. Committees should exercise independent judgment and integrity when exercising its functions as well as present the collegial body with recommendations concerning the decisions of the collegial body. Nevertheless the final decision shall be 10 In the event the collegial body elected by the general shareholders' meeting is the board, the recommendation concerning its independence from the company's management bodies applies to the extent it relates to the independence from the company's chief executive officer. |
Yes | |
|---|---|---|
| 4.9. Committees established by the collegial body should normally be composed of at least three members. In companies with small number of members of the collegial body, they could exceptionally be composed of two members. Majority of the members of each committee should be constituted from independent members of the collegial body. In cases when the company chooses not to set up a supervisory board, remuneration and audit committees should be entirely comprised of non-executive directors. Chairmanship and membership of the committees should be decided with due regard to the need to ensure that committee membership is refreshed and that undue reliance is not placed on particular individuals. |
Yes | |
| 4.10. Authority of each of the committees shall be determined by the collegial body. Committees shall perform their duties in line with authority delegated to them and inform the collegial body on their activities and performance on regular basis. Authority of every committee stipulating the role and rights and duties of the committee shall be made public at least once a year (as part of the information disclosed by the company annually on its corporate governance structures and practices). Companies shall also make public annually a statement by existing committees on their composition, number of meetings and attendance over the year, and their main activities. Audit committee shall confirm that it is satisfied with the independence of the audit process and describe briefly the actions it has taken to reach this conclusion. |
Yes | Annual statement of the audit committee is presented to the Board and shareholders meeting. |
| 4.11. In order to ensure independence and impartiality of the committees, members of the collegial body that are not members of the committee shall commonly have a right to participate in the meetings of the committee only if invited by the committee. A committee may invite or demand participation in the meeting of particular officers or experts. Chairman of each of the committees shall have a possibility to maintain direct communication with the shareholders. Events when such are to be performed shall be specified in the regulations for committee activities. |
Yes |
| 4.12. Nomination Committee. 4.12.1. Key functions of the nomination committee shall be the following: 1) Identify and recommend, for the approval of the collegial body, candidates to fill board vacancies. The nomination committee shall evaluate the balance of skills, knowledge and experience on the management body, prepare a description of the roles and capabilities required to assume a particular office, and assess the time commitment expected. Nomination committee can also consider candidates to members of the collegial body delegated by the shareholders of the company; 2) Assess on regular basis the structure, size, composition and performance of the supervisory and management bodies, and make recommendations to the collegial body regarding the means of achieving necessary changes; 3) Assess on regular basis the skills, knowledge and experience of individual directors and report on this to the collegial body; 4) Properly consider issues related to succession planning; 5) Review the policy of the management bodies for selection and appointment of senior management. 4.12.2. Nomination committee shall consider proposals by other parties, including management and shareholders. When dealing with issues related to executive directors or members of the board (if a collegial body elected by the general shareholders' meeting is the supervisory board) and senior management, chief executive officer of the company shall be consulted by, and entitled to submit proposals to the nomination committee. |
N/A | |
|---|---|---|
| 4.13. Remuneration Committee. 4.13.1. Key functions of the remuneration committee should be the following: 1) Make proposals, for the approval of the collegial body, on the remuneration policy for members of management bodies and executive directors. Such policy should address all forms of compensation, including the fixed remuneration, performance-based remuneration schemes, pension arrangements, and termination payments. Proposals considering performance-based remuneration schemes should be accompanied with recommendations on the related objectives and evaluation criteria, with a view to properly aligning the pay of executive director and members of the management bodies with the long-term interests of the shareholders and the objectives set by the collegial body; 2) Make proposals to the collegial body on the individual remuneration for executive directors and member of management bodies in order their remunerations are consistent with company's remuneration policy and the evaluation of the performance of these persons concerned. In doing so, the committee should be properly informed on the total compensation obtained by executive directors and members of the management bodies from the affiliated companies;; 3) Ensure that remuneration of individual executive directors or members of management body is proportionate to the remuneration of other executive directors or members of management body and other staff members of the company. 4) Periodically review the remuneration policy for executive directors or members of management body, including the policy regarding share-based remuneration, and its implementation. 5) Make proposals to the collegial body on suitable forms of contracts for executive directors and members of the management bodies; 6) Assist the collegial body in overseeing how the company complies with |
N/A |
| applicable provisions regarding the remuneration-related information disclosure (in particular the remuneration policy applied and individual remuneration of directors); 7) Make general recommendations to the executive directors and members of the management bodies on the level and structure of remuneration for senior management (as defined by the collegial body) with regard to the respective information provided by the executive directors and members of the management bodies. 4.13.2. With respect to stock options and other share-based incentives which may be granted to directors or other employees, the committee should: 1) Consider general policy regarding the granting of the above mentioned schemes, in particular stock options, and make any related proposals to the collegial body; 2) Examine the related information that is given in the company's annual report and documents intended for the use during the shareholders meeting; 3) Make proposals to the collegial body regarding the choice between granting options to subscribe shares or granting options to purchase shares, specifying the reasons for its choice as well as the consequences that this choice has. 4.13.3. Upon resolution of the issues attributable to the competence of the remuneration committee, the committee should at least address the chairman of the collegial body and/or chief executive officer of the company for their opinion on the remuneration of other executive directors or members of the management bodies. 4.13.4. The remuneration committee should report on the exercise of its functions to the shareholders and be present at the annual general meeting for this purpose |
||
|---|---|---|
| 4.14. Audit Committee. 4.14.1. Key functions of the audit committee shall be the following: 1) Observe the integrity of the financial information provided by the company, in particular by reviewing the relevance and consistency of the accounting methods used by the company and its group (including the criteria for the consolidation of the accounts of companies in the group); 2) At least once a year review the systems of internal control and risk management to ensure that the key risks (inclusive of the risks in relation with compliance with existing laws and regulations) are properly identified, managed and reflected in the information provided; 3) Ensure the efficiency of the internal audit function, among other things, by making recommendations on the selection, appointment, reappointment and removal of the head of the internal audit department and on the budget of the department, and by monitoring the responsiveness of the management to its findings and recommendations. Shall there be no internal audit authority in the company, the need for one shall be reviewed at least annually; 4) Make recommendations to the collegial body related with selection, appointment, reappointment and removal of the external auditor (to be done by the general shareholders' meeting) and with the terms and conditions of his engagement. The committee shall investigate situations that lead to a resignation of the audit company or auditor and make recommendations on required actions in such situations; 5) Monitor independence and impartiality of the external auditor, in particular by reviewing the audit company's compliance with applicable guidance relating to the rotation of audit partners, the level of fees paid by the company, and similar issues. In order to prevent occurrence of material conflicts of interest, the committee, based on the auditor's disclosed inter alia data on all remunerations paid by the company to the auditor and |
Yes | Audit committee established and approved by the shareholders' meeting. |
| network, shall at all times monitor nature and extent of the non-audit | |
|---|---|
| services. Having regard to the principals and guidelines established in the 16 | |
| May 2002 Commission Recommendation 2002/590/EC, the committee shall | |
| determine and apply a formal policy establishing types of non-audit services | |
| that are (a) excluded, (b) permissible only after review by the committee, | |
| and (c) permissible without referral to the committee; | |
| 6) Review efficiency of the external audit process and responsiveness of | |
| management to recommendations made in the external auditor's |
|
| management letter. | |
| 4.14.2. All members of the committee shall be furnished with complete | |
| information on particulars of accounting, financial and other operations of | |
| the company. Company's management shall inform the audit committee of | |
| the methods used to account for significant and unusual transactions where | |
| the accounting treatment may be open to different approaches. In such case a | |
| special consideration shall be given to company's operations in offshore | |
| centers and/or activities carried out through special purpose vehicles | |
| (organizations) and justification of such operations. | |
| 4.14.3. The audit committee shall decide whether participation of the | |
| chairman of the collegial body, chief executive officer of the company, chief | |
| financial officer (or superior employees in charge of finances, treasury and | |
| accounting), or internal and external auditors in the meetings of the | |
| committee is required (if required, when). The committee shall be entitled, | |
| when needed, to meet with any relevant person without executive directors | |
| and members of the management bodies present. | |
| 4.14.4. Internal and external auditors shall be secured with not only effective | |
| working relationship with management, but also with free access to the | |
| collegial body. For this purpose the audit committee shall act as the principal | |
| contact person for the internal and external auditors. | |
| 4.14.5. The audit committee shall be informed of the internal auditor's work | |
| program, and shall be furnished with internal audit's reports or periodic | |
| summaries. The audit committee shall also be informed of the work program | |
| of the external auditor and shall be furnished with report disclosing all | |
| relationships between the independent auditor and the company and its | |
| group. The committee shall be timely furnished information on all issues | |
| arising from the audit. | |
| 4.14.6. The audit committee shall examine whether the company is | |
| following applicable provisions regarding the possibility for employees to | |
| report alleged significant irregularities in the company, by way of |
|
| complaints or through anonymous submissions (normally to an independent | |
| member of the collegial body), and shall ensure that there is a procedure | |
| established for proportionate and independent investigation of these issues | |
| and for appropriate follow-up action. | |
| 4.14.7. The audit committee shall report on its activities to the collegial body | |
| at least once in every six months, at the time the yearly and half-yearly | |
| statements are approved. |
| 4.15. Every year the collegial body shall conduct the assessment of its | No |
|---|---|
| activities. The assessment shall include evaluation of collegial body's | |
| structure, work organization and ability to act as a group, evaluation of each | |
| of the collegial body member's and committee's competence and work | |
| efficiency and assessment whether the collegial body has achieved its | |
| objectives. The collegial body shall, at least once a year, make public (as | |
| part of the information the company annually discloses on its management | |
| structures and practices) respective information on its internal organization | |
| and working procedures, and specify what material changes were made as a | |
| result of the assessment of the collegial body of its own activities. |
The working procedure of supervisory and management bodies established in the company shall ensure efficient operation of these bodies and decision-making and encourage active co-operation between the company's bodies.
| 5.1. The company's supervisory and management bodies (hereinafter in this Principle the concept 'collegial bodies' covers both the collegial bodies of supervision and the collegial bodies of management) shall be chaired by chairpersons of these bodies. The chairperson of a collegial body is responsible for proper convocation of the collegial body meetings. The chairperson shall ensure that information about the meeting being convened and its agenda are communicated to all members of the body. The chairperson of a collegial body shall ensure appropriate conducting of the meetings of the collegial body. The chairperson shall ensure order and working atmosphere during the meeting. |
Yes | This regulation in the Company is realized by the Board. |
|---|---|---|
| 5.2. It is recommended that meetings of the company's collegial bodies shall be carried out according to the schedule approved in advance at certain intervals of time. Each company is free to decide how often to convene meetings of the collegial bodies, but it is recommended that these meetings shall be convened at such intervals, which would guarantee an interrupted resolution of the essential corporate governance issues. Meetings of the company's supervisory board shall be convened at least once in a quarter, and the company's board shall meet at least once a month. |
Yes | The Board sittings are convened at least once per quarter. |
| 5.3. Members of a collegial body shall be notified of the meeting being convened in advance in order to allow sufficient time for proper preparation for the issues on the agenda of the meeting and to ensure fruitful discussion and adoption of appropriate decisions. Alongside with the notice of the meeting, all the documents relevant to the issues on the agenda of the meeting shall be submitted to the members of the collegial body. The agenda of the meeting shall not be changed or supplemented during the meeting, unless all members of the collegial body are present or certain issues of great importance to the company require immediate resolution. |
Yes |
| 5.4. In order to co-ordinate operation of the company's collegial bodies and ensure effective decision-making process, chairpersons of the company's collegial bodies of supervision and management shall closely co-operate by co-coordinating dates of the meetings, their agendas and resolving other issues of corporate governance. Members of the company's board shall be free to attend meetings of the company's supervisory board, especially where issues concerning removal of the board members, their liability or |
Yes | The Board is doing the work that collegial body should do. |
|---|---|---|
| remuneration are discussed. | ||
The corporate governance framework shall ensure the equitable treatment of all shareholders, including minority and foreign shareholders. The corporate governance framework shall protect the rights of the shareholders.
| 6.1. It is recommended that the company's capital shall consist only of the shares that grant the same rights to voting, ownership, dividend and other rights to all their holders. |
Yes | Ordinary shares comprising the share capital provide equal rights to all shareholders of the Company. |
|---|---|---|
| 6.2. It is recommended that investors shall have access to the information concerning the rights attached to the shares of the new issue or those issued earlier in advance, i.e. before they purchase shares. |
Yes | |
| 6.3. Transactions that are important to the company and its shareholders, such as transfer, investment, and pledge of the company's assets or any other type of encumbrance shall be subject to approval of the general shareholders' meeting. All shareholders shall be furnished with equal opportunity to familiarize with and participate in the decision-making process when significant corporate issues, including approval of transactions referred to above, are discussed. |
Yes | The major shareholders have representatives in the Board which is the decision-maker. |
| 6.4. Procedures of convening and conducting a general shareholders' meeting should ensure equal opportunities for the shareholders to effectively participate at the meetings and should not prejudice the rights and interests of the shareholders. The venue, date, and time of the shareholders' meeting should not hinder wide attendance of the shareholders. |
Yes | All shareholders are informed about the date, place and time of the general meeting. The shareholders can get information on the meeting's agenda beforehand. |
| 6.5. If is possible, in order to ensure shareholders living abroad the right to access to the information, it is recommended that documents on the course of the general shareholders' meeting should be placed on the publicly accessible website of the company not only in Lithuanian language, but in English and /or other foreign languages in advance. It is recommended that the minutes of the general shareholders' meeting after signing them and/or adopted resolutions should be also placed on the publicly accessible website of the company. Seeking to ensure the right of foreigners to familiarize with the information, whenever feasible, documents referred to in this recommendation should be published in Lithuanian, English and/or other foreign languages. Documents referred to in this recommendation may be published on the publicly accessible website of the company to the extent that publishing of these documents is not detrimental to the company or the company's commercial secrets are not revealed. |
Yes |
| 6.6. Shareholders shall be furnished with the opportunity to vote in the general shareholders' meeting in person and in absentia. Shareholders shall not be prevented from voting in writing in advance by completing the general voting ballot. |
Yes | |
|---|---|---|
| 6.7. With a view to increasing the shareholders' opportunities to participate effectively at shareholders' meetings, the companies are recommended to expand use of modern technologies by allowing the shareholders to participate and vote in general meetings via electronic means of communication. In such cases security of transmitted information and a possibility to identify the identity of the participating and voting person should be guaranteed. Moreover, companies could furnish its shareholders, especially shareholders living abroad, with the opportunity to watch shareholder meetings by means of modern technologies. |
No |
| 7.1. Any member of the company's supervisory and management body shall avoid a situation, in which his/her personal interests are in conflict or may be in conflict with the company's interests. In case such a situation did occur, a member of the company's supervisory and management body shall, within reasonable time, inform other members of the same collegial body or the company's body that has elected him/her, or to the company's shareholders about a situation of a conflict of interest, indicate the nature of the conflict and value, where possible. |
Yes | |
|---|---|---|
| 7.2. Any member of the company's supervisory and management body may not mix the company's assets, the use of which has not been mutually agreed upon, with his/her personal assets or use them or the information which he/she learns by virtue of his/her position as a member of a corporate body for his/her personal benefit or for the benefit of any third person without a prior agreement of the general shareholders' meeting or any other corporate body authorized by the meeting. |
Yes | |
| 7.3. Any member of the company's supervisory and management body may conclude a transaction with the company, a member of a corporate body of which he/she is. Such a transaction (except insignificant ones due to their low value or concluded when carrying out routine operations in the company under usual conditions) must be immediately reported in writing or orally, by recording this in the minutes of the meeting, to other members of the same corporate body or to the corporate body that has elected him/her or to the company's shareholders. Transactions specified in this recommendation are also subject to recommendation 4.5. |
Yes |
| 7.4. Any member of the company's supervisory and management body shall | Yes |
|---|---|
| abstain from voting when decisions concerning transactions or other issues of personal or business interest are voted on. |
|
Remuneration policy and procedure for approval, revision and disclosure of directors' remuneration established in the company shall prevent potential conflicts of interest and abuse in determining remuneration of directors, in addition it shall ensure publicity and transparency both of company's remuneration policy and remuneration of directors.
| 8.2. Remuneration statement shall mainly focus on directors' remuneration N/A policy for the following year and, if appropriate, the subsequent years. The statement shall contain a summary of the implementation of the remuneration policy in the previous financial year. Special attention shall be given to any significant changes in company's remuneration policy as compared to the previous financial year. 8.3. Remuneration statement should leastwise include the following N/A information: 1) Explanation of the relative importance of the variable and non-variable |
|
|---|---|
| components of directors' remuneration; 2) Sufficient information on performance criteria that entitles directors to share options, shares or variable components of remuneration; 3) An explanation how the choice of performance criteria contributes to the long-term interests of the company; 4) An explanation of the methods, applied in order to determine whether performance criteria have been fulfilled; 5) Sufficient information on deferment periods with regard to variable components of remuneration; 6) Sufficient information on the linkage between the remuneration and performance; 7) The main parameters and rationale for any annual bonus scheme and any other non-cash benefits; 8) Sufficient information on the policy regarding termination payments; 9) Sufficient information with regard to vesting periods for share-based remuneration, as referred to in point 8.13 of this Code; 10) Sufficient information on the policy regarding retention of shares after vesting, as referred to in point 8.15 of this Code; 11) Sufficient information on the composition of peer groups of companies the remuneration policy of which has been examined in relation to the establishment of the remuneration policy of the company concerned; 12) A description of the main characteristics of supplementary pension or early retirement schemes for directors; 13) Remuneration statement should not include commercially sensitive |
| 8.4. Remuneration statement shall also summarize and explain company's policy regarding the terms of the contracts executed with executive directors and members of the management bodies. It shall include, inter alia, information on the duration of contracts with executive directors and members of the management bodies, the applicable notice periods and details of provisions for termination payments linked to early termination under contracts for executive directors and members of the management bodies. |
N/A | |
|---|---|---|
| 8.5. Remuneration statement shall also contain detailed information on the entire amount of remuneration, inclusive of other benefits, that was paid to individual directors over the relevant financial year. This document shall list at least the information set out in items 8.5.1 to 8.5.4 for each person who has served as a director of the company at any time during the relevant financial year. 8.5.1. The following remuneration and/or emoluments-related information shall be disclosed: 1) The total amount of remuneration paid or due to the director for services performed during the relevant financial year, inclusive of, where relevant, attendance fees fixed by the annual general shareholders meeting; 2) The remuneration and advantages received from any undertaking belonging to the same group; 3) The remuneration paid in the form of profit sharing and/or bonus payments and the reasons why such bonus payments and/or profit sharing were granted; 4) If permissible by the law, any significant additional remuneration paid to directors for special services outside the scope of the usual functions of a director; 5) Compensation receivable or paid to each former executive director or member of the management body as a result of his resignation from the office during the previous financial year; 6) Total estimated value of non-cash benefits considered as remuneration, other than the items covered in the above points. 8.5.2. As regards shares and/or rights to acquire share options and/or all other share-incentive schemes, the following information shall be disclosed: 1)The number of share options offered or shares granted by the company during the relevant financial year and their conditions of application; 2) The number of shares options exercised during the relevant financial year and, for each of them, the number of shares involved and the exercise price or the value of the interest in the share incentive scheme at the end of the financial year; 3) The number of share options unexercised at the end of the financial year; their exercise price, the exercise date and the main conditions for the exercise of the rights; 4) All changes in the terms and conditions of existing share options occurring during the financial year. 8.5.3. The following supplementary pension schemes-related information shall be disclosed: 1) When the pension scheme is a defined-benefit scheme, changes in the directors' accrued benefits under that scheme during the relevant financial |
N/A | |
| year; 2) When the pension scheme is defined-contribution scheme, detailed information on contributions paid or payable by the company in respect of that director during the relevant financial year. |
| 8.5.4. The statement shall also state amounts that the company or any subsidiary company or entity included in the consolidated annual financial statements of the company has paid to each person who has served as a director in the company at any time during the relevant financial year in the form of loans, advance payments or guarantees, including the amount outstanding and the interest rate. |
||
|---|---|---|
| 8.6. Where the remuneration policy includes variable components of remuneration, companies should set limits on the variable component(s). The non-variable component of remuneration should be sufficient to allow the company to withhold variable components of remuneration when performance criteria are not met. |
N/A | |
| 8.7. Award of variable components of remuneration should be subject to predetermined and measurable performance criteria. |
N/A | |
| 8.8. Where a variable component of remuneration is awarded, a major part of the variable component should be deferred for a minimum period of time. The part of the variable component subject to deferment should be determined in relation to the relative weight of the variable component compared to the non-variable component of remuneration. |
N/A | |
| 8.9. Contractual arrangements with executive or managing directors should include provisions that permit the company to reclaim variable components of remuneration that were awarded on the basis of data which subsequently proved to be manifestly misstated. |
N/A | |
| 8.10. Termination payments should not exceed a fixed amount or fixed number of years of annual remuneration, which should, in general, not be higher than two years of the non-variable component of remuneration or the equivalent thereof. |
No | |
| 8.11. Termination payments should not be paid if the termination is due to inadequate performance |
Yes | |
| 8.12. The information on preparatory and decision-making processes, during which a policy of remuneration of directors is being established, should also be disclosed. Information should include data, if applicable, on authorities and composition of the remuneration committee, names and surnames of external consultants whose services have been used in determination of the remuneration policy as well as the role of shareholders' annual general meeting. |
N/A | |
| 8.13. Shares should not vest for at least three years after their award. | N/A |
| 8.14. Share options or any other right to acquire shares or to be remunerated on the basis of share price movements should not be exercisable for at least three years after their award. Vesting of shares and the right to exercise share options or any other right to acquire shares or to be remunerated on the basis of share price movements, should be subject to predetermined and measurable performance criteria |
N/A | |
|---|---|---|
| 8.15. After vesting, directors should retain a number of shares, until the end of their mandate, subject to the need to finance any costs related to acquisition of the shares. The number of shares to be retained should be fixed, for example, twice the value of total annual remuneration (the non variable plus the variable components). |
N/A | |
| 8.16. Remuneration of non-executive or supervisory directors should not include share options. |
N/A | |
| 8.17. Shareholders, in particular institutional shareholders, should be encouraged to attend general meetings where appropriate and make considered use of their votes regarding directors' remuneration. |
N/A | |
| 8.18. Without prejudice to the role and organization of the relevant bodies responsible for setting directors' remunerations, the remuneration policy or any other significant change in remuneration policy shall be included into the agenda of the shareholders' annual general meeting. Remuneration statement shall be put for voting in shareholders' annual general meeting. The vote may be either mandatory or advisory. |
N/A | |
| 8.19. Schemes anticipating remuneration of directors in shares, share options or any other right to purchase shares or be remunerated on the basis of share price movements shall be subject to the prior approval of shareholders' annual general meeting by way of a resolution prior to their adoption. The approval of scheme shall be related with the scheme itself and not to the grant of such share-based benefits under that scheme to individual directors. All significant changes in scheme provisions shall also be subject to shareholders' approval prior to their adoption; the approval decision shall be made in shareholders' annual general meeting. In such case shareholders shall be notified on all terms of suggested changes and get an explanation on the impact of the suggested changes. |
N/A | |
| 8.20. The following issues shall be subject to approval by the shareholders' annual general meeting: 1) Grant of share-based schemes, including share options, to directors; 2) Determination of maximum number of shares and main conditions of share granting; 3) The term within which options can be exercised; 4) The conditions for any subsequent change in the exercise of the options, if permissible by law; 5) All other long-term incentive schemes for which directors are eligible and which are not available to other employees of the company under similar terms. Annual general meeting shall also set the deadline within which the body responsible for remuneration of directors may award compensations listed in this article to individual directors. |
N/A |
| 8.21. Shall national law or company's Articles of Association allow, any discounted option arrangement under which any rights are granted to subscribe to shares at a price lower than the market value of the share |
N/A | |
|---|---|---|
| prevailing on the day of the price determination, or the average of the market | ||
| values over a number of days preceding the date when the exercise price is | ||
| determined, shall also be subject to the shareholders' approval. | ||
| 8.22. Provisions of Articles 8.19 and 8.20 shall not be applicable to schemes | ||
| allowing for participation under similar conditions to company's employees | N/A | |
| or employees of any subsidiary company whose employees are eligible to | ||
| participate in the scheme and which has been approved in the shareholders' | ||
| annual general meeting. | ||
| 8.23. Prior to the annual general meeting that is intended to consider | N/A | |
| decision stipulated in Article 8.19, the shareholders must be provided an opportunity to familiarize with draft resolution and project-related notice |
||
| (the documents shall be posted on the company's website). The notice shall | ||
| contain the full text of the share-based remuneration schemes or a | ||
| description of their key terms, as well as full names of the participants in the | ||
| schemes. Notice shall also specify the relationship of the schemes and the | ||
| overall remuneration policy of the directors. Draft resolution must have a | ||
| clear reference to the scheme itself or to the summary of its key terms. | ||
| Shareholders must also be presented with information on how the company | ||
| intends to provide for the shares required to meet its obligations under | ||
| incentive schemes. It shall be clearly stated whether the company intends to | ||
| buy shares in the market, hold the shares in reserve or issue new ones. There | ||
| shall also be a summary on scheme-related expenses the company will suffer | ||
| due to the anticipated application of the scheme. All information given in | ||
| this article must be posted on the company's website. |
The corporate governance framework shall recognize the rights of stakeholders as established by law and encourage active co-operation between companies and stakeholders in creating the company value, jobs and financial sustainability. For the purposes of this Principle, the concept "stakeholders" includes investors, employees, creditors, suppliers, clients, local community and other persons having certain interest in the company concerned.
| 9.1. The corporate governance framework shall assure that the rights of stakeholders that are protected by law are respected. |
Yes | |
|---|---|---|
| 9.2. The corporate governance framework shall create conditions for the stakeholders to participate in corporate governance in the manner prescribed by law. Examples of mechanisms of stakeholder participation in corporate governance include: employee participation in adoption of certain key decisions for the company; consulting the employees on corporate governance and other important issues; employee participation in the company's share capital; creditor involvement in governance in the context of the company's insolvency, etc. |
||
| 9.3. Where stakeholders participate in the corporate governance process, they shall have access to relevant information. |
The corporate governance framework shall ensure that timely and accurate disclosure is made on all material information regarding the company, including the financial situation, performance and governance of the company.
| 10.1. The company shall disclose information on: 1) The financial and operating results of the company; 2) Company objectives; 3) Persons holding by the right of ownership or in control of a block of shares in the company; 4) Members of the company's supervisory and management bodies, chief executive officer of the company and their remuneration; 5) Material foreseeable risk factors; 6) Transactions between the company and connected persons, as well as transactions concluded outside the course of the company's regular operations; 7) Material issues regarding employees and other stakeholders; 8) Governance structures and strategy. This list shall be deemed as a minimum recommendation, while the companies are encouraged not to limit themselves to disclosure of the information specified in this list. |
Yes | Information about the company pointed out in these recommendations is disclosed in the following sources: annual report, financial statements and notes to the financial statements, announcements on acquisition/disposal of shareholdings, announcements on significant events through the information system of the Stock Exchange. |
|---|---|---|
| 10.2. It is recommended that consolidated results of the whole group to which the company belongs shall be disclosed when information specified in item 1 of Recommendation 10.1 is under disclosure. |
Yes | |
| 10.3. It is recommended that information on the professional background, qualifications of the members of supervisory and management bodies, chief executive officer of the company shall be disclosed as well as potential conflicts of interest that may have an effect on their decisions when information specified in item 4 of Recommendation 10.1 about the members of the company's supervisory and management bodies is under disclosure. It is also recommended that information about the amount of remuneration received from the company and other income shall be disclosed with regard to members of the company's supervisory and management bodies and chief executive officer as per Principle VIII. |
Yes | |
| 10.4. It is recommended that information about the links between the company and its stakeholders, including employees, creditors, suppliers, local community, as well as the company's policy with regard to human resources, employee participation schemes in the company's share capital, etc. shall be disclosed when information specified in item 7 of Recommendation 10.1 is under disclosure. |
Yes |
| 10.5. Information shall be disclosed in such a way that neither shareholders nor investors are discriminated with regard to the manner or scope of access to information. Information shall be disclosed to all simultaneously. It is recommended that notices about material events shall be announced before or after a trading session on the NASDAQ OMX Vilnius, so that all the company's shareholders and investors shall have equal access to the information and make informed investing decisions. |
Yes | Information through the centralized information system is presented in the Lithuanian and English languages at the same time. Furthermore, the company aims to announce the information before or after the trading session and provide it to all markets in which the company's shares are traded. Information which may influence the share price is not disclosed in any way until such information is publicly announced through the Stock Exchange information system. |
|---|---|---|
| 10.6. Channels for disseminating information shall provide for fair, timely and cost-efficient access to relevant information by users. It is recommended that information technologies shall be employed for wider dissemination of information, for instance, by placing the information on the company's website. It is recommended that information shall be published and placed on the company's website not only in Lithuanian, but also in English, and, whenever possible and necessary, in other languages as well. |
Yes | |
| 10.7. It is recommended that the company's annual reports and other periodical accounts prepared by the company shall be placed on the company's website. It is recommended that the company shall announce information about material events and changes in the price of the company's shares on the Stock Exchange on the company's website too. |
Yes |
The mechanism of the selection of the company's auditor shall ensure independence of the firm of auditor's conclusion and opinion.
| 11.1. An annual audit of the company's financial reports and interim reports should be conducted by an independent firm of auditors in order to provide an external and objective opinion on the company's financial statements. |
Yes | |
|---|---|---|
| 11.2. It is recommended that the company's supervisory board and, where it is not set up, the company's board shall propose a candidate firm of auditors to the general shareholders' meeting. |
Yes | The Company follows this regulation. The Board proposes an audit firm for election to the general shareholders meeting. |
| supervisory board and, where it is not formed, the company's board upon their consideration which firm of auditors to propose for the general |
11.3. It is recommended that the company shall disclose to its shareholders the level of fees paid to the firm of auditors for non-audit services rendered to the company. This information shall be also known to the company's |
Yes |
|---|---|---|
| shareholders' meeting. |
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